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The Multifamily Production Index (MPI), recently released by the National Association of Home Builders (NAHB), posted a gain of eight points to 56 in the second quarter.

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 second quarter: low-rent units and market-rate rental units rose five points to 53 and 60, respectively, while for-sale units climbed 14 points to 57. This is the highest the for-sale index has been since 2005.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, fell three points to 38, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.

“Multifamily developers continue to see strong demand in many parts of the country,” said Steven E. Lawson, president of The Lawson Companies in Virginia Beach, Va., and vice chairman of NAHB’s Multifamily Council. “However, developers need to be careful to manage costs as prices of land, labor and some materials continue to rise.”

“A return to a positive trend in the MPI is consistent with positive builder sentiment in other segments of the housing industry,” said NAHB Chief Economist Robert Dietz. “Multifamily demand remains solid even as apartment construction comes off cycle highs as the multifamily market seeks a balance between supply and demand.”

For data tables on the MPI and MVI, visit www.nahb.org/mms.

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