WASHINGTON — The multifamily housing market continued to show improvement in the second quarter of 2011, with the Multifamily Production Index (MPI) increasing for the fourth consecutive quarter.

Compiled by the National Association of Home Builders (NAHB), the MPI rose from 41.7 in the first quarter of the year to 44.4 in the second quarter. According to NAHB, it is the highest quarterly reading since 2006, and continues the trend of generally improving conditions in the market for new multifamily housing. Multifamily housing is defined as: construction of low-rent units, construction of market-rate-rent units, and construction of "for sale" units. In the second quarter of 2011, a majority of developers saw improvements in the production of low-rent and market-rate units.

"Multifamily rental construction is trending upward, and it is definitely the brightest sector in the broader housing market," said NAHB Chief Economist David Crowe. "However, the entire housing market continues to be very fragile and subject to many external pressures, including an ongoing shortage of financing for new projects."

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, 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. Crowe noted that multifamily developers and property owners expect vacancy rates to decline over the next six months.

"Even though multifamily is trending upward, production is still very low in a historic context and in the context of what we project is necessary to meet long-term demand," Crowe said.