Business View - December 2014 33
Multifamily vacancy index and new home
sales down, builder confidence up
4 | National Association of Home Builders
ated with the NAHB’s annually construct as
much as 80% of the single-family and multi-
family homes built in America, but beyond
serving as the voice of these in the industry,
the NAHB actually represents a much wider
range of interest through its efforts to ensure
that everyone in this country has access to
safe, decent and affordable housing, whether
they are purchasing or renting a home. To
further that mission, the NAHB offers a
wide range of business-related services to its
members as well as other home builder asso-
ciations, organizes the largest of tradeshows,
forums and awards programs relating to the
industry, advocates on behalf of members on
Capitol Hill when laws or policies are pro-
posed for enactment, and collaborates with
a number of federal agencies on regulations
or codes which affect the housing industry.
NAHB affiliates include: Home Innovation
Research Labs (which develops, tests and
evaluates new materials and methods to im-
prove the integrity and affordability of hous-
ing); the Home Builders Institute (a work-
force development division that develops
and administers educational and job train-
ing programs); and The National Housing
Endowment (a non-profit initiative aimed
at helping the housing industry develop
more effective approaches to home building,
T
he Multifamily Production Index, a leading
indicator for the multifamily market
released in late August by the National
Association of Home Builders, posted a gain of five
points to a reading of 58 for the second quarter.
It is the 10th straight quarter with a reading of 50
or above.
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 any number higher than 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 market-rate rental units, low-rent units and
“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 qu rter of
2012; low-rent units increased four points to 52; and for-
sale units rose two points to 56.
“We have seen steady growth for the apartment market
since 2011,” said W. Dean Henry, chairman of NAHB’s
Multifamily Leadership Board and CEO of Legacy Partners
Residential in Foster City, Calif. “There will continue to be
strong demand for the foreseeable future, but the availability
of construction labor is still proving to be a challenge.”
The Multifamily Vacancy Index, which measures the
multifamily housing industry’s perception of vacancies, was
essentially unchanged, increasing one point to 38. With the
MVI, lower numbers indicate fewer vacancies.
“The MVI, the vacancy index, has been holding steady
at a healthy level of 37 to 38 since late 2013,” said David
Crowe, NAHB’s chief economist. “Although this is slightly
above the low vacancy numbers we saw in 2011 and 2012,
those lownumbers were the result of depressed production
with few new apartments coming on line. Meanwhile, the
strength of the MPI, the production index, in the second
quarter is not surprising, given that we’ve seen employment
improve, which allows younger consumers to form their
own households.”
The MPI and MVI have continued to perfor well as
leading indicators of U.S. Census figures for multifamily
s arts a d v c ncy rates, providing inform tion on likely
m vement the C nsus figures one to three quarters in
advance.
Sales of newly built, single-family homes fell 2.4 percent
to a seasonally adjusted annual rate of 412,000 units in July,
according to newly released data by the U.S. Department
of Housing and Urban Development and the U.S. Census
Bureau. Sales numbers for June were revised up 16,000 to
422,000.
“We are somewhat surprised by this dip, considering
builder confidence and new-home starts are on the rise,”
said NAHB Chairman Kevin Kelly, a home builder and
developer from Wilmington, Del. “However, builders are
increasing their level of inventory in anticipation that sales
will gradually improve during the rest of the year.”
“Though new-home sales is a volatile metric that can
fluctuate significantly from month to month, the economic
fundamentals are in place for an ongoing housing recovery,”
Crowe said. “Consumer confidence continues to improve,
mortgage rates are at yearly lows, and the labor market is
healing. These factors should help spur pent-up demand.”
CONSTRUCTION
