While single-family housing production remains relatively weak, multi-family housing continues to strengthen across the country. Future home buyers continue to sit on the sideline and instead have opted for renting or have purchased town homes and other non-traditional housing.

NAHB’s multifamily production index (MPI) rose for a fourth consecutive quarter in the second quarter of 2011 to 44.4. It is the highest quarterly reading since 2006, and continues the trend of generally improving conditions in the market for new multifamily housing that has emerged since the MPI dropped to a record low of 16.0 in the third quarter of 2008.

The index and all of its three components (construction of low-rent units, construction of market-rate-rent units, and construction of “for sale” units) are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. In the second quarter of 2011, a majority of developers saw improvements in the production of low-rent and market-rate units. Looking forward, most developers expect conditions to continue improving for these two segments of the market.

Meanwhile, the Multifamily Vacancy Index (MVI) increased slightly from 35.0 in the first quarter of 2011 to 36.1 in the second quarter. With the MVI, lower numbers indicate fewer vacancies. Results also show that multifamily developers and property owners expect vacancy rates to decline over the next six months.