Although this marks the fifth straight quarter with a reading over 50, the Multifamily Production Index inched down two points to an index level of 52, according to the National Association of Home Builders. 

The MPI tracks builder and developer sentiment about current conditions within the apartment and condominium market on a scale of 0 to 100. Any number higher than 50 is an indicator more respondents report improving conditions than worsening conditions.

Construction of low-rent units, market-rate rental units and "for-sale" units are the three key elements that comprise the multifamily housing market. 

The MPI component that tracks builder and developer perceptions of market-rate rental properties fell four points to 61 in the first quarter; however, it has remained above 60 for seven consecutive months. The for-sale units component dipped four points to 42, while low-rent units increased two points to 55. 

"The apartment sector overall has largely recovered since the downturn, so we have now reached a level of development that is close to equilibrium and can continue at this pace," said W. Dean Henry, CEO of Legacy Partners Residential. "With that said, there are still certain markets around the country that have room to grow." 

The Multifamily Vacancy Index measuring the multifamily housing industry’s perception of vacancies increased seven points to 38. Lower numbers indicate fewer vacancies with the MVI, which improved consistently throughout 2010 and has leveled out some throughout 2011 and 2012. 

Traditionally, the MPI and MVI have been strong indicators of U.S. Census figures for multifamily starts and vacancy rates, providing information on likely movement in the Census figures one to three quarters in advance. 

"The multifamily market has recovered substantially since the end of 2010, and is well on its way to reaching a sustainable level," said NAHB Chief Economist David Crowe. "However, there are still issues facing builders and developers that could have an impact on future production, such as a shortage of labor with basic construction skills and rising prices for some building materials."