Construction rates of new apartment units still strong

Building professionals nationwide appear to be more confident in the multifamily market, as the National Association of Home Builders (NAHB) reports sentiment about construction of apartment and condominiums grew in the second quarter.

The report, The Multifamily Production Index (MPI), showed improvement for the eighth consecutive quarter, growing to 54 from 51 in the first quarter. This reading is the highest since the second quarter of 2005.

The MPI measures builder and developer confidence about current market conditions on a scale from 1 to 100. The measurement is based on sentiment regarding three parts of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale" units, or condominiums.

The Mulitfamily Vacancy Index, which measures the multifamily housing market officials' perception of vacancies, rose to 36, which is approximately the level maintained throughout 2011.

Rental property management companies are likely confident in the market too, as the Trulia Rent Monitor report shows rents decreased slightly during August, but remain historically high. As construction continues, rental rates are likely to continue to decrease. Vacancy rates, however, are not predicted to decrease at the same rate, so the amount of rental applications processed by property managers should not experience a significant dip.