Builder and developer sentiment about the multifamily market held steady in the fourth quarter, according to results from NAHB’s Multifamily Production Index (MPI) released earlier today.
The overall MPI—a composite measure of sentiment about production of low-rent apartments, market-rate rental apartments and condominiums—was unchanged at 54 in the fourth quarter.
The MPI and each of its components is an index that ranges from 0 to 100, where any number over the break-even point of 50 means that more respondents report conditions are improving than report conditions are getting worse. The overall MPI has been above 50 for three straight years, indicating that builders and developers, on balance, believe the market has been improving consistently over that time.
Among the components of the MPI, the index for low-rent apartments increased one point to 52, the index for market-rate rental fell two points to 62, and the index for condominiums held steady at 50.
Historically, the MPI has performed well as a leading indicator of starts in buildings with five or more apartments, often moving one to three quarters in advance of the construction numbers released by the U.S. Census Bureau.
An overall MPI of 54 is consistent with NAHB’s view that the multifamily segment of the industry has largely recovered from the downturn, and that multifamily production has now reached a healthy, sustainable level.
For more information, including detailed tables on the components of the MPI, see the web page for NAHB’sMultifamily Production & Vacancy Indices.