Multi-Family Builders Growing More Optimistic

Washington, DC, May 29, 2009--Recent hints of optimism in the housing industry appear to have spread to the multifamily sector, according to the first quarter of 2009 results of the Multifamily Rental Market Index (MRMI) and the Multifamily Condo Market Index (MCMI)`by the National Association of Home Builders (NAHB).
 
“Multifamily builders are beginning to see slight improvement in the current market for new rental and for-sale units, and anticipate even better times in the next six months,” said David Crowe, NAHB’s chief economist.

“The components of the index measuring customer interest rose significantly; the index level of calls from prospective renters rose 14 points, to 50.9, and the index reflecting traffic in prospective condo buyers jumped 25 points.”
 
The indexes gauging current production conditions remain low, but two of them – low-rent units and for-sale units – increased from the fourth quarter. The index for production of low-rent units increased nearly four points to 26.3. The for-sale sector, after two quarters of index levels in the single digits, now shows starts for condo developments at an index level of 14.5, down only slightly from last year’s first quarter.
 
The near future appears more promising to builders than any time since the first quarter of 2008. Builder expectations for starts of affordable rentals six months from now hit 38.1; market rate rentals were at 31.1, and for-sale units rose nearly 13 points to hit 25.4.
 
According to Crowe, “The stock of existing homes for rent and for sale is greater than the consumer demand right now, and is in direct competition with new supply. As that inventory is absorbed, and as new households form during the economic recovery, the demand for multifamily rentals will rise, and production will return to a more ‘normal’ level.”