Confidence in the multifamily housing sector declined in the second quarter of 2021, due in part to COVID-related regulations and restrictions, according to the National Association of Home Builders’ (NAHB) Multifamily Market Survey (MMS).
The Multifamily Production Index (MPI) measures builder and developer sentiment about current conditions in the apartment and condo market on a scale of 0 to 100. Anything below 50 indicates that “more respondents report conditions are getting worse than report conditions are improving.”
– Overall, the MPI declined three points to 48
– The MPI component measuring low-rent units increased three points to 49
– The component measuring market rate rental units declined three points to 51
– The component measuring for-sale units dropped seven points to 45
The Multifamily Occupancy Index measures the multifamily industry’s perception of occupancies in existing apartments.
– Increased six points. At 70, this is the highest reading since the report launched.
The takeaway:
The multifamily sector is experiencing several hurdles related to the pandemic, including newly imposed government regulations, challenges with financing and in-person restrictions.
“Demand for rental housing remains strong, but headwinds that have emerged in some parts of the country are slowing production of new apartments,” said Justin MacDonald, president and CEO of The MacDonald Companies in Kerrville, Texas, and chairman of NAHB’s Multifamily Council. “The moratorium on evictions is making it difficult to obtain financing in places where rental assistance is inadequate to offset the moratorium. In other places, local governments imposing new regulations and switching to virtual meetings are making it take longer to obtain approvals.”
“The MPI softened slightly in the second quarter while multifamily production continued to increase, but it is typical for the MPI to turn one to three quarters before starts,” said NAHB Economist Robert Dietz. “Nevertheless, the MPI remains as strong as it was at any point in 2020 and NAHB expects more apartments to be started in 2021 than in 2019 or 2020.”
