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Robust Multifamily Building in Q3
Will Carry Over

Gain of 10.5 Percent Predicted in Q4 Forecast


Axiometrics, an apartment and student housing data services firm, said the construction of multifamily units was 20 percent higher in the third quarter of 2016, compared to the second quarter. It is also forecasting a gain of 10.5 percent in the fourth quarter.

The number of multifamily units rose a robust 20 percent from the second to the third quarters of 2016, and Axiometrics has forecast that this sector will increase another 10.5 percent in the fourth quarter.

Axiometrics says the actual number of units will climb from 83,210 in the third quarter of this year to almost 92,000 over the last three months of 2016.

In addition, the apartment and student housing data services firm has forecast that the level of multifamily building will be about the same in the first quarter of 2017, compared to this year's fourth quarter. Then it will increase in the second quarter, and decrease slightly in the third and fourth quarters of next year.

Axiometrics notes that this sector is highly volatile. Multifamily building starts dropped nearly 40 percent in September, and were down about 42.5 percent year-over-year. Then it jumped nearly 75 percent in October, versus September, and was up 28.2 percent from a year ago.

The industry continues to be plagued by a shortage of skilled labor, delaying the timelines for many projects and raising costs, according to Axiometrics.

The Multifamily Production Index (MPI) of the National Association of Home Builders posted a gain of three points to 53 in the third quarter. The MPI has been at 50 or above since the beginning of 2012.

Each MPI measures builder and developer sentiment about current conditions in the apartment and condominium market. Any number above 50 indicates that more survey respondents said conditions are improving, as opposed to worsening.

The MPI is comprised from three components: construction of low-rent units, market-rate rental units, and "for-sale" units, or condominiums. All three elements increased in the third quarter, the NAHB said. Low-rent units rose two points to 54, and market-rate rental units and for-sale units both increased four points to 57 and 59, respectively.

NAHB officials also maintain a Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies. The MVI remained unchanged at a reading of 42, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011, the NAHB reports.

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July 21, 2019, 1:15 pm PDT

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