The real estate industry continued to build momentum at the end of 2011, creating a trend that may carry over into 2012.
According to the National Association of Home Builders, one sector that thrived during the fourth quarter last year was the multifamily market, which showed gains for six consecutive months during the three-month period.
The industry group's Multifamily Production Index, which measures builder sentiment about the current state of the sector, reached 48.9 at the end of 2011 from 47.3 during the third quarter. This is the highest mark the index, which is measured on a scale of zero to 100, has reached since the final quarter of 2005.
"The apartment and condo sector continues to be a bright spot in the housing market, with the overall index at its highest level in six years," said NAHB chief economist David Crowe. "The rental components have been the driving force behind the increased index level. And although the for-sale component remains weaker, it is still double what it was just six quarters ago."
Specifically, the portion of the index that measures builder sentiment in regard to market-rate rental properties reached an all-time high of 64.3 during the period. In addition, sentiment about low-rent units also improved to a reading of 55.5, as for-sale units remained relatively unchanged at an index of 30.6.
However, NAHB noted that lending regulation and tight credit standards continue to hold the industry back from making a faster recovery.
"Capital is limited in this current market, and developers are having a difficult time obtaining the credit needed to finance the development of new apartments," said NAHB multifamily leadership board president W. Dean Henry.
Meanwhile, builder optimism about the future of the multifamily market also improved, as the outlook of all three components, including low-rent units, market-rate rental units and for-sale properties, showed notable gains.
As sentiment for the multifamily market improves, mortgage records from the Mortgage Bankers Association also showed improvements in commercial and apartment mortgage loan delinquencies.
At the end of 2011, delinquencies on these mortgages edged 0.02 percent lower to 0.17 percent. In addition, the rate of seriously delinquent commercial loan borrowers dipped 0.2 percent to 3.55 percent.