Homebuilder and developer sentiment regarding conditions in the apartment and condominium market improved for the eighth consecutive quarter, according to the National Association of Home Builders.

The association’s multifamily production index rose to 54 (on a scale of zero to 100) in the second quarter, the highest reading since the second quarter of 2005. In the previous quarter the MPI stood at 51.

The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and for-sale condominiums. Any number above 50 indicates that more respondents report better conditions than those who report worsening conditions.

"The strength of the MPI suggests that multifamily production is likely to increase somewhat going forward," NAHB Chief Economist David Crowe said.

Multifamily production recovered substantially from a historic low of about 110,000 starts a year in 2009 and 2010 to today’s annual rate of a little more than 200,000. However, prior to the downturn multifamily starts totaled about 300,000 per year for 12 straight years, “so there is room for further improvement before apartment and condo production return to normal, sustainable levels,” Crowe said.

The NAHB’s multifamily vacancy index, which measures the multifamily housing industry's perception of vacancies, increased five points to 36 (lower numbers indicate fewer vacancies), bringing it back to the level it sustained throughout 2011.

After peaking at 70 in the second quarter of 2009, the MVI declined consistently through 2010, then held steady at either 35 or 36 in every quarter of 2011.