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Index Above 50 For 14th Straight Quarter  The Multifamily Production Index increased one point to 55 in the second quarter, as builders and developers of apartments and condominiums surveyed seemed to be mostly pleased about market conditions in April, May and June. Their sentiments are reflected in the Multifamily Production Index (MPI), which increased one point to 55. This is the 14th consecutive quarter with a reading of 50 or better. Any number above 50 indicates that more developers feel conditions are improving rather than worsening. There are three key elements to each MPI, maintained by the National Association of Home Builders. Builders are asked for their opinions of the construction of low-rent units, market-rate rentals and "for-sale" units, or condominiums. In the second-quarter survey, the low-rent component stayed steady at 54, while market-rate rentals increased one point to 60. The condominium component made the biggest jump, rising three points to 53. "The multifamily market continues to perform quite well, and we expect that trend to continue," W. Dean Henry, chairman of the NAHB's Multifamily Leadership Board, said. "The market is benefitting from new household formations. As these households are formed, many are choosing to live in apartments or condos." Builders and developers are also asked for their thoughts on vacancies in the multifamily housing sector. The second-quarter Multifamily Vacancy Index dropped two points to 34. Lower numbers equate to fewer vacancies. Both indexes show the multifamily housing market is in good shape, David Crowe, chief economist for the NAHB, said. "However, developers in certain parts of the country are experiencing lot and labor shortages, which can hinder production," he added. The second-quarter MVI is its lowest reading since the fourth quarter of 2012, and Crowe also noted that the index has declined for the third quarter in a row. Website link: https://tinyurl.com/purhdo9 The July value of new construction starts of $630 billion was virtually unchanged from the previous month, Dodge Data and Analytics reports. Nonresidential building increased 2 percent to $194.0 billion. The commercial categories as a whole jumped 12 percent in July, after declining by the same amount in June. Office construction climbed 7 percent because of several large projects. Store construction improved 6 percent, helped by the start of the $40 million Wade Park Shopping Center in Frisco, Texas. The warehouse category rallied 28 percent after a lackluster June, aided by a $48 million Home Goods distribution center in Tucson, Ariz. Hotel construction has had sound year-to-year numbers of late, but slipped 4 percent in July. New manufacturing starts plummeted 39 percent from June. The July data kept the Dodge Index at 133, the same as June. While June and July are at the low end of readings so far this year, they are still well above the average of 125 in 2014. The Dodge Index has ranged from 133 to 156 in 2015. The institutional building group declined 1 percent, and the educational facilities category dropped 20 percent. Healthcare facilities fell 15 percent, while the institutional categories all registered gains in July. Transportation-related buildings jumped 120 percent, helped by the start of a $200 million rail service facility in Croton On Hudson, N.Y. The amusement and recreational building category climbed 49 percent, aided by the start of a $130 million student center at the University of Kentucky in Lexington, and a $123 million music hall renovation in Cincinnati, Ohio. Both the public buildings category and churches rebounded from a very weak June, with gains of 58 percent and 32 percent respectively. "The first half of 2015 showed wide swings in the pattern of total construction starts, affected by the presence or absence of unusually large projects," Robert A. Murray, chief economist for Dodge Data and Analytics, said. "Amid these top-line swings, the underlying trend of activity has been generally upward relative to last year," Murray said. "For nonresidential building, support has come primarily from its institutional segment, including educational facilities, transportation-related buildings, and amusement and recreational facilities. "The commercial categories showed some deceleration during the early months of 2015, but positive real estate market fundamentals are expected to encourage renewed growth," Murray added. "Residential building has benefitted from this year's heightened amount of multi-family starts, and even the single-family side of the market is showing some hesitant signs of strengthening." Website link: https://tinyurl.com/qaloag6  HTML Comment Box is loading comments...
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