Builder Confidence Drops in U.S. Multifamily

---

Builder and developer confidence in the U.S. apartment and condominium market dropped slightly during the fourth quarter, as costs and labor continue to hinder the market. 

The multifamily production index dropped four points to 50 during the final quarter of 2013, according to the National Association of Home Builders. 

However, this is the eighth consecutive reading of 50 or higher. A reading higher than 50 indicates improving market conditions. 

All three key elements of the index -- construction of low-rent units, market-rate rentals and "for-sale" units -- dropped during the fourth quarter. 

"Multifamily developers are still seeing demand for apartments," said W. Dean Henry, chairman of NAHB's Multifamily Leadership Board. "However, the cost and availability of labor is putting pressure on the ability to bring new units online." 

The multifamily vacancy index dropped two points to 38, after peaking at 70 in the second quarter of 2009, the NAHB states.  

"This quarter's MPI results are in line with NAHB's forecast that calls for increased production of new apartments in 2014, but at a slower pace than last year," said NAHB chief economist David Crowe. "The results are also in line with recent downturns in other economic indicators, due to unusually severe weather in parts of the country that disrupted supply chains and affected confidence in several sectors of the economy."