Housing, Multifamily On Steady Growth Track

WASHINGTON, DC-The housing industry received good news in the form of two separate reports from the National Association of Home Builders. In one, the Multifamily Production Index held steady with a score of 52, making it the third straight quarter with a reading over 50. In the other, NAHB reported that the number of housing markets considered to be "improving" has jumped by 76 to reach 201 in December.

The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. In the third quarter of 2012, the MPI component tracking builder and developer perceptions of market-rate rental properties reached a record score of 69. In addition it has been over 60 for five consecutive quarters, which is the longest sustained period of strength since the inception of the index in 2003. For-sale units had its highest reading since the fourth quarter of 2005, of 44, while low-rent units dropped 15 points to 46.

"Our baseline forecast calls for further steady growth in the rate of multifamily production," says NAHB chief economist David Crowe, in a prepared statement. That said, he noted that areas of concern still exist, especially at the affordable end of the rental apartment market, where builder confidence dropped dramatically in the third quarter.

"That was likely due to a specific provision of the Low-Income Housing Tax Credit set to expire at the end of the year," Crowe says. "The prospect of dealing with this is making lower-rent projects difficult to underwrite."

A separate report, the National Association of Home Builders/First American Improving Markets Index, surged by 76 to a total of 201 metros in December. A total of 84 new metros were added to the list including Atlanta; Bloomington, IL; Ann Arbor, MI; Seattle; and Green Bay, WI. This is the fourth consecutive month of expansion in the IMI, Crowe points out.

Here too, he expects to see continued improvement. However, he warned, "that is absent a major policy change of the kind that some policymakers have been discussing with regard to the mortgage interest deduction."