The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), posted a gain of two points to 55 in the fourth quarter. The MPI has been at 50 or above for five straight years.
The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums. Low-rent units remained unchanged at 54 while market-rate rental units rose one point to 58 and for-sale units increased three points to 53.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, remained unchanged at a reading of 42, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.
“Multifamily developers are feeling optimistic about the market as demand for renting remains robust,” said Dan Markson, senior vice president of The NRP Group in San Antonio, Texas, and chairman of NAHB’s Multifamily Council. “However, regulatory burdens remain a challenge to the industry, which affect developers’ ability to meet this demand.”
“Given the recent strength of multifamily starts and permits numbers, it is not surprising that multifamily developer sentiment remains positive,” said NAHB Chief Economist Robert Dietz. “Our current forecast calls for multifamily production to stabilize at a solid rate and stay there through 2018.”
Historically, the MPI and MVI have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates, providing information on likely movement in the Census figures one to three quarters in advance.
For data tables on the MPI and MVI, visit www.nahb.org/mms.