Multifamily Market Still Brightest Spot in Housing

Washington, DC, Sept. 9, 2011 -- The multifamily housing market continued to show improvement in the second quarter, according to the National Association of Home Builders index.

The MPI rose from 41.7 in the first quarter of the year to 44.4 in the second quarter. It is the highest quarterly reading since 2006, and continues the trend of generally improving conditions in the market for new multifamily housing that has emerged since the MPI dropped to a record low of 16.0 in the third quarter of 2008, NAHB said.

The index measures construction of low-rent units, market-rate-rent units, and "for sale" units. Numbers greater than 50 indicate improving conditions.

In the second quarter, a majority of developers saw improvements in the production of low-rent and market-rate units.

"Multifamily rental construction is trending upward, and it is definitely the brightest sector in the broader housing market," said NAHB Chief Economist David Crowe.

"However, the entire housing market continues to be very fragile and subject to many external pressures, including an ongoing shortage of financing for new projects."

Expectations about multifamily construction for the next six months improved in the second quarter in all three market component.