The Multifamily Production Index released May 26 by the National Association of Home Builders remained essentially unchanged in the first quarter of 2016 after rising one point to 53. This is the 17th consecutive reading of 50 or above.
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. The component measuring low-rent units increased four points to 54 in the first quarter, while market-rate rental units and for-sale units both dropped one point to 58 and 48, respectively.
The Multifamily Vacancy Index, which measures the multifamily housing industry’s perception of vacancies, remained essentially unchanged with a decrease of one point to 39, with higher numbers indicating more vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.
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.