In the first quarter of 2012, NAHB’s Multifamily Vacancy Index (MVI) dropped to 31, the lowest it’s been since the inception of the index in 2003. As the MVI captures industry sentiment about vacancies, a decline in the index signals overall improvement in the market for existing rental apartments.
The MVI is a composite measure of multifamily property owner/manager sentiment about vacancies in Class A, Class B, and Class C apartments. Each component lies on a scale of 0 to 100, where any number below 50 indicates that more owners and managers report conditions are improving than report conditions are getting worse. All MVI components have been below 50 since the first quarter of 2010.
The strength in the first quarter of 2012 seemed concentrated in the upper tiers of the market. The MVI components tracking sentiment on Class A and Class B vacancies each declined by 4 points—to 29 and 30, respectively. This is the lowest point ever for the component on Class vacancies, and the second lowest for the Class B component. Meanwhile, the component for Class C vacancies ticked up to 42.
Over its 9-year history, NAHB’s MVI has tended to foreshadow movement in the Census rental vacancy rate for buildings with 5 or more apartments. In the third quarter of 2011, for example, the MVI was indicating stability to slight improvement in the market while the 5-plus vacancy rate increased substantially. The movement in the Census series proved to be a temporary anomaly, however, and now both series are trending downward—with the MVI showing a slightly stronger downward trend in the first quarter of 2012.
For more information, including a longer history for all components of the MVI, see the web page for NAHB’s Multifamily Production & Vacancy Indices.