Photo: Robert Clark
US condo and apartment builders ended 2017 feeling more confident about the housing market.
Despite lingering concerns about rising construction and labor costs, homebuilder outlook improved in the fourth quarter thanks to continued national job growth, according to a report released today by the National Association of Home Builders (NAHB).
But, increased job growth can also negatively impact the overall housing market.
The Multifamily Production Index (MPI) gained seven points to a final reading of 53 in the fourth quarter of 2017, indicating a more positive outlook.
The MPI measures condo and apartment builder sentiment on a scale of 0 to 100. Any MPI reading above 50 indicates that more respondents report conditions are improving than report conditions worsening.
Homebuilders are reportedly encouraged by national job growth, which increases household wealth. This puts families in a better financial position to become homebuyers.
“Continued job growth and increasing household formation are key drivers for the multifamily market moving forward,” says NAHB Chief Economist Robert Dietz in the digital release.
The MPI is comprised of three components, all of which posted gains in the fourth quarter.
Over the last quarter, the construction of low-rent units rose 2 points to a reading of 56, and market-rate rental units jumped 11 points to a reading of 54.
At the same time, although for-sale units increased 9 points, the reading only reached 49, indicating that homebuilders are still concerned about the level of for-sale inventory.
Lastly, the NAHB Multifamily Vacancy Index (MVI) remained unchanged from the previous quarter at a reading of 41 in the fourth quarter. The MVI measures builder perception of vacancies.
The MVI has remained “fairly stable” since 2013. It peaked at a reading of 70 in the second quarter of 2009.
Click here to read the entire release.