Confidence for developers of new multifamily housing increased year-over-year in Q2, according to the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB).
NAHB found that the Multifamily Production Index (MPI) had a reading of 46, up two points year-over-year. The MPI measures builder and developer sentiment about current production conditions in the apartment and condo market on a scale of 0 to 100 (50 being the midpoint). The MPI component measuring garden/low-rise dropped three points to 50, the component measuring mid/high-rise units increased seven points to 36, the component measuring subsidized units jumped 10 points to 61 and the component measuring built-for-sale units posted a three-point decline to 35.
“An MPI that is up two points but still below 50 is consistent with NAHB’s projection that multifamily starts will be modestly higher in 2025 compared to 2024, while remaining significantly below the number of units started in 2023,” said NAHB Chief Economist Robert Dietz. “Multifamily starts are still facing headwinds like higher interest rates and construction costs, but are becoming less constrained by the number of apartments under construction, which is falling back toward more historically normal levels.”
The Multifamily Occupancy Index (MOI) had a reading of 82, up one point year-over-year, according to NAHB’s release. The MOI measures the multifamily housing industry’s perception of occupancies in existing apartments on a scale of 0 to 100. All MOI three components remain solidly in positive territory above 50: the component measuring garden/low-rise units increased two points to 84, the component measuring mid/high-rise units fell three points to 73 and the component measuring subsidized units rose five points to 90.
”Multifamily developer confidence and sentiment are showing slight signs of improvement when compared to this time last year,” said Debra Guerrero, the chairman of NAHB’s Multifamily Council. “High interest rates, rising construction costs, limited land availability and restrictive local regulations are still significant issues in certain parts of the country. But confidence in subsidized affordable housing has shown considerable improvement in this survey, due in part to optimism surrounding the expansion of federal affordable housing resources flowing from the recent congressional reconciliation bill.”
For the full report, visit nahb.org/mms.
