“Job losses and tightening credit continue to depress current and future multifamily construction,” said David Crowe, NAHB’s Chief Economist. “Without job growth as a demand driver for rental apartments, new construction is declining. And without access to credit, the pipeline for future construction is running dry.”

The MRMI, a gauge of supply conditions, fell sharply in the final quarter of 2008, down to 22.4 for affordable apartments and 18.6 for market rate apartments, compared to same period of the previous year’s showing of 45.3 and 40.00, respectively.  For condos, the supply part dropped 11 points from the last quarter of 2007, to hit a new record low of 7.8.

 NAHB’s Multifamily Market Indexes are results of a quarterly surveys of multifamily builders and developers in which they rank their perceptions of the current conditions and expectations for the near future as “good,” “fair,” or “poor.” Respondents’ answers are from a scale of 0 to 100. A rating of 50 denotes that the number of positive responses is about the same as the number of negative responses.

 Looking six months forward, builders and developers are only slightly less pessimistic with the MRMI component measuring builder expectations for the supply of affordable rentals standing at 28.6, down from 48.9 in the fourth quarter of 2007.

For the demand, the MRMI tracking current conditions for every class of rental apartments—affordable, moderately priced, and luxury market-rate. The index value tracking demand Class A apartments, dropped to 23.5, down 19.9 points from the same period in 2007. For moderately priced and affordable apartments, index values dropped 11.6 points and 15.9 points respectively to 37.1 and 42.4.

Other indicators continue to be pale as traffic among potential renters and condo buyers fell.  Vacancy rates for apartments is higher than at the same period a year ago while asking rents dropped.  For the fourth quarter of 2008, the index value for asking rents was at 41, a record low since the start of the series in 2003.

Market-rate rentals, at 22.5, were less than half the level of 50 at the same time a year ago. The MCMI, the index gauging expectations for condo supply, dropped to 13, down from 29.2 in the same period the previous year.