Multifamily Vacancy Index Stays in the Low 30s

March 8, 2013

In the fourth quarter of 2012, NAHB’s Multifamily Vacancy Index (MVI), which measures property owners’ confidence in the strength of the market for existing rental apartments, improved slightly—falling two points to 31. Because the MVI captures the industry’s sentiment about apartment vacancies, lower numbers are better.

After peaking at 70 in the second quarter of 2009, the MVI declined consistently through 2010 and has remained at a fairly low level in the low to mid 30s throughout 2011 and 2012.  So, in this respect, the fourth quarter gave us more of the same.

Historically, the MVI has tended to foreshadow the Census Bureau’s measure of rental vacancies in buildings with 5 or more apartments.  When conditions are changing, the MVI generally turns at least one quarter before the 5+ vacancy rate.MVI 12 Q4

Recently, both measures have been edging downward.  At 31, the MVI is currently as low as it’s been since NAHB initiated the survey in 2003, while the 5+ vacancy rate has dipped below 9 for the first time since 2000.

The MVI is one of two main sentiment indices produced from NAHB’s quarterly survey of multifamily developers, property owners, and managers; the other being the Multifamily Production Index (MPI). For more information, including a complete history for both indices and all of their components, see NAHB’s web page for the MPI & MVI.


Homeownership Rate Holds Steady in Fourth Quarter

January 29, 2013

The seasonally adjusted homeownership rate remained unchanged at 65.3% during the final three months of 2012. For the year as a whole, the homeownership rate averaged approximately 65.5%–the weakest calendar year average since 1996. Homeownership rates declined across all age groups compared to the fourth quarter of 2011; however, the largest year-over-year decline occurred among households headed by a person aged between 35 and 44 years. In fact, the newest reading is down nearly two percentage points and has fallen to a new all-time recorded low of 60.4%.


While all householder age groups have seen homeownership rates contract from mid-decade peaks, the overall decline registered by the 35-44 year cohort has been the largest. Indeed, the homeownership rate for this age group has plunged nearly 10 percentage points below its peak level observed in mid-2004. By comparison, the homeownership rate among households headed by a person aged 65 years and older has remained above 80% for the wide majority of quarters over the past three years.

Even though the trend in homeownership among younger households is a notable downside risk for long-term housing demand should it prove difficult to reverse, the 45-54 and 55-64 cohorts will likely have a more immediate impact to the outlook. These two age groups constitute the largest blocks of homeowners and are considered key sources of “move-up” demand, trading their existing homes for newer and/or larger living spaces. The rate at which these households become homeowners versus renters will be a key variable to watch going forward.

In addition to reporting the homeownership rate, the Census Bureau report provides an estimate of the vacant owner and renter housing stock. The rental vacancy rate inched slightly higher during the fourth quarter of 2012 to 8.7%, but remains 70 basis points lower compared the same period a year ago. While rental vacancies increased slightly, the homeowner vacancy rate remained steady at 1.9% to close out 2012, tying the third quarter for the lowest vacancy rate since late 2005.

vacancy rate

Homeownership Rate Holds Steady during Second Quarter

July 30, 2012

The Census Bureau reported the seasonally adjusted homeownership rate remained unchanged at 65.6 percent during the second quarter of 2012, hovering at a 15-year low for the 2nd consecutive quarter. The performance across household head age groups was mixed as the under 35 and 55-64 cohorts saw homeownership rates decline compared to the first quarter of 2012. By contrast, homeownership rates improved for the three remaining age groups, with the largest gain observed for householders between the ages of 35 and 44.

Aside from the householders aged 65 years and over, homeownership rates among the other age groups remain appreciably lower in comparison to the same period a year ago and significantly lower than their peak levels observed in the mid-2000s. The largest decline overall has been observed in the 35-44 age group, where the homeownership rate has tumbled nearly 9 percentage points.

The ongoing large decline in homeownership among younger cohorts is worrisome; however, since the 45-54 and 55-64 age groups account for nearly half of all owner-occupied households combined, fluctuations in homeownership among these two age groups will likely have more visibly significant impacts on overall homeownership rates. Fortunately, as economic conditions continue to improve and members of these two older age groups begin to form new households (or re-constitute former as they move out of combined living arrangements), they should tend towards buying rather than renting.

In addition to the homeownership rate, this report also examines trends in the vacant housing stock. The rental vacancy rate declined for the third consecutive quarter, falling to 8.6%–the lowest reading in a decade. Other sources, such as NAHB’s own Multifamily Vacancy Index, reveal a similar downward trend in apartment vacancies. The homeowner vacancy rate has fallen steadily in each of the last six quarters, declining to a reading of 2.1%.