The Multifamily Production Index (MPI) inched down two points to an index level of 52 for the first quarter of 2013. This marks the fifth straight quarter with a reading over 50.
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 any number over 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.
In the first quarter of 2013, the MPI component tracking builder and developer perceptions of market-rate rental properties dropped four points to 61, but has been above 60 for seven consecutive quarters–the longest sustained period of strength since the inception of the index in 2003. For-sale units dipped four points to 42, while low-rent units rose two points to 55.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, rose seven points to 38. With the MVI, lower numbers indicate fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been at a fairly moderate level throughout 2011 and 2012.
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.