If you are an HVAC contractor in the apartment and condominium business, you could become busier in the near future. The National Association of Home Builders released figures showing an improvement in The Multifamily Production Index (MPI) for the eighth consecutive quarter. The current index level of 54 is the highest reading since 2005.
The MPI measures builder and developer sentiment about the apartment and condominium market on a scale of 0 to 100. It provides a composite measure reflecting three key elements in the multifamily housing market. These factors, the construction of low-rent units, market-rate rental units, and condominiums, take into account the current conditions in each market. The index is scaled so that any number over 50 indicates that more builders and developers report improving conditions.
Market rate rental properties are the strongest, according to the index. The index level for this segment has been over 60 for four consecutive quarters. The market rate rental property market appears to be on a steady recovery path. New construction is increasing to try and keep up with current consumer demand.
This strong MPI suggests multifamily production is likely to increase. This means good news for contractors working in the apartment and condominium niche. Credit issues continue to create problems for developers, however. The credit situation may make it difficult for new construction to keep up with the demand for multifamily housing.