According to the National Association of Home Builders latest Multifamily Production Index, a gain of seven points to 53 in the fourth quarter of 2017 was recorded.
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 provides 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.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, remained even at 41, with lower numbers indicating fewer vacancies. The MVI has been fairly stable since 2013, after peaking at 70 in the second quarter of 2009.
"Multifamily developers continue to see solid demand in many parts of the country," said Steven Lawson, president of The Lawson Companies in Virginia Beach, Va., and chairman of NAHB's Multifamily Council. "However, developers need to be careful to manage costs as prices of land, labor and some building materials continue to rise."
"The positive MPI reading is consistent with builder sentiment readings in other segments of the housing industry," said NAHB Chief Economist Robert Dietz. "Continued job growth and increasing household formation are key drivers for the multifamily market moving forward."