The market for newly-built apartments and condos continued to improve in the third quarter of 2020 – showing progress on vacancies.

The National Association of Home Builders (NAHB) Multifamily Production Index (MPI) – which measures builder and developer sentiment about current conditions in the multifamily sector – jumped 11 points to 48 in Q3.

Of the three components of the MPI, low-rent unit construction climbed four points to 46, while the component measuring market-rate rental units soared 19 points to 53, and for-sale units saw an 11-point increase to 46.

“Sentiment regarding the multifamily housing market has risen from recent lows, but there are persistent headwinds and ongoing uncertainty,” said Barry Kahn, chairman of NAHB’s Multifamily Council. “Nevertheless, lenders see multifamily performing better than most other forms of commercial real estate.”

The NAHB’s Multifamily Vacancy Index (MVI) also showed signs of recovery last quarter, falling 18 points to 44, with smaller numbers indicating fewer vacancies.

“The third quarter survey results and NAHB’s forecast suggest a rising share of multifamily construction in less dense areas of the nation in need of rental housing,” said NAHB Chief Economist Robert Dietz. “However, material availability is a near-term concern, with the potential for rising regulatory risk in 2021.”