Q2 Multifamily Production Index (MPI) Gained 5 Points

08.29.14 · Ann Adamson · 844 Views

By Ann Adamson

The National Association of Home Builders (NAHB) said for Q2 the Multifamily Production Index (MPI), a leading indicator for the multifamily market released byposted a gain of five points to a reading of 58. The good news is that this is the 10th quarter with a reading of 50 or above.

MPI measures builder and developer sentiment about the current apartment and condominium market conditions, which are rated on a scale of 0 to 100. This index is scaled so that any number over 50 showing that respondents are reporting that conditions are improving than reporting that the conditions are getting worse. MPI measures three important elements of the multifamily housing market:

1) The construction of market-rate rental units;

2) low-rent units, and;

3)“for-sale” units, or condominiums.

In the second quarter of 2014, the MPI component tracking builder and developer perceptions of market-rate rental properties had a significant increase of nine points to 68, which is the highest reading since the third quarter of 2012; low-rent units increased four points to 52; and for-sale units rose two

The Multifamily Vacancy Index (MVI)

MVI measures the multifamily housing industry’s perception of vacancies. If the MVI has lower numbers, this indicates fewer vacancies. This increased one point to 38. MVI, the vacancy index, has been holding steady at a healthy level of 37 to 38 since late 2013. It is a bit above the low vacancy numbers we saw in 2011 and 2012, those low numbers were the result of depressed production with few new apartments coming on line.

Analysts agree that the strength of the MPI, the production index in Q2, is in part because we’ve seen employment improve, which allows younger consumers to form their own households.