Apartment, Condominium Market Posts Positive Gains in the Third Quarter

November 17, 2016

Builder and developer sentiment about current conditions in the apartment and condominium market improved during the third quarter, according to the National Association of Home Builders (NAHB).

NAHB’s latest Multifamily Production Index (MPI) posted a gain of three points to 53 during the latest quarter. The MPI has been at 50 or above since the beginning of 2012. The index measures sentiment on a scale of 0 to 100.

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. All three components increased in the third quarter. Low-rent units rose two points to 54, and market-rate rental units and for-sale units both increased four points to 57 and 59, respectively.

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.

"Overall, multifamily developers remain positive about the market," said Andrew Chaban, CEO of Princeton Properties in Lowell, Mass., and chairman of NAHB's Multifamily Council. "However, in some areas of the country developers have to overcome challenges of labor and lot shortages to meet demand."

"This quarter's MPI reading is consistent with our projection that the multifamily housing sector will have a strong year in 2017," said NAHB Chief Economist Robert Dietz. "The multifamily sector has led the housing recovery and should continue to be supported by favorable demographics."

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