Confidence in the market for new multifamily housing declined year-over-year in Q2, according to results from the Multifamily Market Survey released today by the National Association of Home Builders.
“Multifamily developers are less optimistic than they were at this time last year,” said Tom Tomaszewski, president of The Annex Group and chairman of NAHB’s Multifamily Council. “Some are struggling with particular local regulations, but the main reason it’s difficult to get projects started is high interest rates.”
The Multifamily Production Index had a reading of 44, down 12 points year-over-year. Even though all four of the components posted year-over-year declines in the second quarter, sentiment about production of garden/low-rise apartments and subsidized apartments remained in positive territory above 50. The component measuring garden/low-rise fell 11 points to 53, the component measuring mid/high-rise units dropped 18 points to 29, the component measuring subsidized units decreased four points to 51 and the component measuring built-for-sale units posted a seven-point decline to 38.
The Multifamily Occupancy Index had a reading of 81, down eight points year-over-year. The component measuring garden/low-rise units fell nine points to 82, the component measuring mid/high-rise units dropped seven points to 76 and the component measuring subsidized units declined six points to 85.
“There is no doubt that interest costs and limited financing availability are making it difficult to develop multifamily properties,” said NAHB Chief Economist Robert Dietz. “However, financial markets may become more stable later in the year, as recent weak economic data make it more likely the Fed will cut interest rates.”
For additional information on the MMS, visit www.nahb.org/mms.
