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Outlook positive for multi-family sector

A survey of multi-family builders and property managers by the National Association of Home Builders (NAHB) indicates an improvement in housing starts and a decline in vacancies compared with the previous quarter, both of which spell positive news for apartment and condo builders across the United States.

The NAHB Multifamily Production Index (MPI) increased to a value of 35.6 for the third quarter of 2010, up from the 26.6 level reported for the second quarter. This is the highest the MPI has been since 2007.

The MPI is a weighted average of components based on respondents' ratings of starts currently versus the previous quarter. All three MPI components increased in the third quarter.

Meanwhile, the NAHB Multifamily Vacancy Index (MVI) registered a decline (fewer vacant apartments) for the fifth quarter in a row -- down to 39.2. The MVI has been declining steadily since reaching a peak of 70.2 in the second quarter of 2009.

"Since 1985, [the] NAHB has been producing the Housing Market Index, which gives an indication of what the coming months will bring in the single-family market," said David Crowe, NAHB's chief economist. "We are confident that the MPI and MVI will provide equally useful information for the multi-family sector."

"It is important to remember that, although both the MPI and the Census Bureau's measures of multi-family production are increasing, they are rising from historically very low levels, with multi-family starts remaining well below a rate that would be sustainable under more normal market conditions,” Crowe added. “Further improvement in multi-family production depends upon resolving the formidable problems that currently exist in accessing credit to develop and build economically viable multi-family projects."

For more data tables, visit nahb.org/mmi.

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