Multi-Family Housing Market Shows Improvement

Washington, DC, June 11, 2010--The multifamily market showed signs of moving back toward stability in the first quarter of 2010, according to the National Association of Home Builders Multifamily Market Index.

The MMI measures multifamily builder sentiment based on production and occupancy at the current time. An index number greater than 50 indicates that the number of builders who view conditions as getting stronger outnumber the number who view conditions as becoming weaker. The values are not seasonally adjusted.

The current demand index for Class A apartments, among the hardest hit by the recession, showed improvement, rising to 41.7, or 19 points higher than a year earlier. The index measuring demand for Class B apartments rose to 43.4, up seven points. Demand for Class C apartments, the least expensive, and the most likely to stay occupied during hard times, actually showed a slight decline, falling about two points to 43.1.

Builders’ expectations for future production, though improved from a year ago, are still constrained by the difficulty in obtaining loans to fund development. Condo starts showed the lowest expectation for increased starts, at 32.7.  The future production index for lower-rent communities is 45.1 and for market-rate rent communities 43.5.

“The most encouraging part of the MMI is the number of multifamily builders who are expecting gains in rental occupancy over the next six months,” according to NAHB Chief Economist David Crowe. “Builders’ optimism is directly related to recent positive employment news and expectations for the trend to continue.  Current conditions are still depressed by multifamily builders’ difficulty obtaining financing for acquisition, development and construction,” said Crowe.