First Quarter Increase in Multi-Family Markets

By Liz Clinger Updated on 6/8/2012

For the seventh quarter in a row, the Multifamily Production Index (MPI) which measures developer and builder sentiment on the conditions currently in the multifamily market, rose. It reached an index level of 51 over 49 on a scale of 0-100 in the fourth quarter of 2011, according to the NAHB. This is the highest MPI since 2005 in the third quarter.

The Multifamily Production Index is scaled so that any number above 50 implies that more respondents consider conditions improving than not improving. The main elements that make up the multifamily housing market are construction of low rent units, market-rate rental units and units for sale. In 2012’s first quarter, builder and developer perceptions tracked by the Multifamily Production Index of low rent units decreased to 53, while perception on for-sale units increased to 37 reaching its highest rating since 2005 and market-rate rental properties reached an all-time high of 69.

While the Multifamily Production Index continues to increase, the Multifamily Vacancy Index which measures the housing industry’s perception of vacancies is showing a decline, reaching a level of 31, the lowest level since the beginning of the index in 2003, indicating lower numbers of vacancies.