Eye On Housing
The Multifamily Production Index (MPI) gained seven points to 53 in the fourth quarter of 2017, according to the National Association of Home Builders (NAHB) (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 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 fourth quarter: low-rent units rose two points to 56, market-rate rental units climbed 11 points to 54 and for-sale units increased nine points to 49.
NAHB also tracks the multifamily market’s perception of vacancies with its Multifamily Vacancy Index (MVI), with lower numbers indicating fewer vacancies. In the fourth quarter, the MVI remained unchanged from the previous quarter at 41 (Figure 2). The MVI has been fairly stable since 2013, after peaking at 70 in the second quarter of 2009.
The positive MPI reading from the fourth quarter is consistent with other builder sentiment readings, such as the NAHB Housing Market Index and the 55+ Housing Market Index. Job growth and household formation are expected to fuel growth in the multifamily market going forward.
For data tables on the MPI and MVI, visit www.nahb.org/mms.
Interesting that while builder sentiment has ticked up, NAHB’s Multifamily Vacancy Index has gone sideways. Perhaps folks are anticipating future supply, which is messing with their perception of actual vacancy (which has gone down).