Rentals On The Rise

Don Hogsett, September 6, 2004

As consumer demand for apartments rises across the country, multi-family housing developers say they're optimistic the rental market is finally in the midst of a recovery, the National Association of Home Builders reported.

The builders' trade group said its Multifamily Market Index for the second quarter showed stepped-up demand for all classes of apartments during the three-month period. “After three years of rising vacancy rates, we're seeing a turnaround in the apartment,” said NAHB President Bobby Rayburn.

All classes of apartments showed improved demand, the canvass showed, with the index for average market-rate apartments growing seven points, to a reading of 50.6. Luxury apartments also rebounded strongly, jumping 10 points to a level of 49.2. Lower-rent units, a category that generally outpaces the other two, continued to do so, rising 10 points to a current reading of 55.3.

While the market is generally improving, oversupply still remains an issue in some markets, the trade group said. The index tracking the number of apartments available for rent jumped more than 10 points from year-before levels, to 64 from 52.1.

The market for condos also remains strong, the canvass reported, with the index gauging supply reaching a level of 58.9, a five point improvement over the past year. But survey respondents said that while they expect the condo market to remains healthy, they think it will cool somewhat during the next six months.

“As interest rates slowly rise, both the for-sale and rental multi-family sectors will approach new points of stability,” said David Seiders, NAHB chief economist.

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