The Multifamily Production Index (MPI) climbed eight points to 56 in the second quarter of 2017, according to the National Association of Home Builders (NAHB). This quarter’s reading is the highest since the third quarter of 2015 (Figure 1).

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 is a composite 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 second quarter: low-rent units and market-rate rental units rose five points to 53 and 60, respectively. Meanwhile, for-sale units jumped 14 points to 57.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, fell three points to 38, 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 (Figure 2). This quarter’s MVI is at its lowest point since the second quarter of 2015.

This quarter’s MPI reading is consistent with NAHB’s forecast: the market will remain solid for the rest of 2017, but is slightly down from the cycle highs seen in 2015 and 2016. For data tables on the MPI and MVI, please visit http://www.nahb.org/mms.