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Builder Confidence Slips in Rental, Condo Markets
Builder confidence in the multifamily housing market sagged in this year’s third quarter, pushing both the Multifamily Condo Market Index (MCMI) and the Multifamily Rental Market Index (MRMI) to their lowest levels since they were created by NAHB in 2003.
The component of the MRMI gauging supply moved dramatically lower during the third quarter for both market-rate and affordable apartments, to 22.2 and 15.7 respectively, down from 43.8 and 44.3 for the same period of 2007.
NAHB's Multifamily Market Indexes are derived from a quarterly survey of multifamily builders and developers in which their responses are rated on a scale of 0 to 100, with a rating of 50 generally indicating an equal number of positive and negative responses.
The MCMI, which gauges current and expected supply in the condominium market, sank into single-digits during the third quarter for the first time ever. The component of the index measuring current conditions dropped to 8.1, down more than five points from 13.5 in the third quarter of 2007. Builder confidence in the condo market over the next six months slumped from 20.8 in the third quarter of 2007 to 9.9 in this year’s third quarter.
Confidence among apartment builders in the six-month supply outlook declined to 19.1 in this year’s third quarter, down sharply from 47.1 a year earlier. Affordable housing developers were also downbeat, with their six-month supply index slipping from 39.1 to 20.3 over the same period.
Even in markets where rental apartment demand has been keeping up with or exceeding supply, multifamily developers have been unable to start new projects because of ongoing credit problems in the capital markets, according to NAHB economists.
Since early this year, NAHB has ratcheted down its forecast for multifamily housing starts substantially.
For more information on multifamily resources available from NAHB, e-mail Ann Marie Moriarty, or call her at 800-368-5242 x8350.
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