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Market’s Now Looking Better For Multi-Family Housing Units

WASHINGTON DC – Things are looking up nationwide for growth in new and existing apartments, condominium buildings, and other forms of multi-family housing, the Washington-based National Association of Home Builders said Thursday (March 10, 2011).

Market's Looking Better For Multi-Family Housing Units

Apartments in St. Louis MO

The association announced that two key measurements it tracks to determine multi-family trends – the Multifamily Production Index, which gauges how builders feel about new construction; and the Multifamily Vacancy Index, which follows what renters are doing – both showed significant improvement during the fourth quarter of 2010. The production number was up, a sign builders were confident about their future. The vacancy number was down, an equally good indicator.

The production index, which tracks developer sentiment about new construction on a scale of 1 (worst) to 100 (best), currently stands at 40.8. That’s the highest number since the fourth quarter of 2006, the association said.

With the vacancy index, smaller numbers indicate fewer vacancies. It’s now at 33.3, the lowest it’s been since the third quarter of 2006, and half of what it was just 18 months ago.

Historically, production and vacancy have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates. Together, they often telegraph movement in Census figures one to three quarters in advance.

Consequently, builders want – but may be unable to – put up more units, according to association Chief Economist David Crowe. Their problem? There’s too little construction financing available to let them meet market demand. That, in turn, will force rental costs up for consumers, said Charles Brindell, chairman of the association’s Multifamily Leadership Board.

Related (to multi-family dwellings):

Related (to the National Association of Home Builders):

Photo from Webster University

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