Multifamily Market Posts Strong Gains

September 7, 2012

In the second quarter of this year, the apartment and condo market reached their highest levels since the second quarter of 2005, according to the Multifamily Production Index, released by the National Association of Home Builders.

The latest improvements in the index marks the eighth consecutive month the multifamily sector has continued to grow. 

The index measures builder and developer sentiment about current conditions in the apartment and condo market, based on three key components: construction of low-rent units, market-rate rental units, and "for-sale" units or condos. Builders reported improvements in July in all three of the components. 

"The strength of the MPI suggests that multifamily production is likely to increase somewhat going forward," says NAHB Chief Economist David Crowe. "Multifamily production has already recovered substantially from a historic low of about 110,000 starts a year in 2009 and 2010 to the current annual rate of a little over 200,000. However, prior to the downturn multifamily starts remained about 300,000 per year for 12 consecutive years, so there is room for further improvement before apartment and condo production return to normal, sustainable levels."

Source: National Association of Home Builders