Multifamily Remains Bright Spot in Housing

Washington, DC, March 9, 2012 -- The National Association of Home Builders' Multifamily Production Index (MPI) showed steady improvement in the apartment and condominium housing market for a sixth consecutive quarter, NAHB said.

The MPI, which measures builder and developer sentiment about current conditions in the multifamily market, increased from 47.3 in the third quarter to 48.9 in the fourth quarter, the highest reading since the fourth quarter of 2005.

The index measures three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale" units, or condominiums.

Any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. In the fourth quarter of 2011, the MPI component tracking builder and developer perceptions of market-rate rental properties recorded an all-time high of 64.3, while low-rent units increased as well to 55.5. For-sale units remained steady at 30.6.

“The apartment and condo sector continues to be a bright spot in the housing market, with the overall index at its highest level in six years,” said NAHB Chief Economist David Crowe.

“The rental components have been the driving force behind the increased index level. And although the for-sale component remains weaker, it is still double what it was just six quarters ago.”

Although improvement has been shown in the multifamily segment, builders and developers say credit restrictions are affecting recovery, NAHB said.