Multifamily developers expressed increased a slightly higher degree of confidence in their market during the second quarter, according to the latest Multifamily Market Survey (MMS) released by the National Association of Home Builders (NAHB).
The MMS produces two separate indices. The Multifamily Production Index (MPI), which measures builder and developer sentiment about current production conditions in the apartment and condo market on a scale of 0 to 100, had a second quarter reading of 46, up two points year-over-year.
The Multifamily Occupancy Index (MOI), which measures the multifamily housing industry’s perception of occupancies in existing apartments on a scale of 0 to 100, had a reading of 82, up one point year-over-year.
“Multifamily developer confidence and sentiment are showing slight signs of improvement when compared to this time last year,” said Debra Guerrero, senior vice president of strategic partnerships and government affairs at The NRP Group in San Antonio and 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.”
“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,” added 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.”
