Multifamily property developers viewed the third quarter with mixed feelings according to the latest Multifamily Market Survey (MMS) released by the National Association of Home Builders (NAHB).
The MMS produces two separate indices. The first is 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 reading of 40, up two points year-over-year. The MPI is a weighted average of four key market segments: the component measuring garden/low-rise units was up three points to 48, the component measuring mid/high-rise units remained even at 28, the component measuring subsidized units rose by seven points to 46 and the component measuring built-for-sale units recorded a three-point drop to 29.
The second of the indices is 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. In the third quarter, the MOI had a reading of 75, down seven points year-over-year.
“The relatively pessimistic MPI of 40 is consistent with multifamily construction starts that have declined from annualized rates above 450,000 from 2021 through mid-2023, to under 350,000 as of September 2024,” said NAHB Chief Economist Robert Dietz. “We expect multifamily construction to remain weak for another year as the market works through a substantial number of units under construction, before beginning to move back to long-term trends toward the end of 2025.”
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Are regulations and problems with evictions causing landlords from entering this market? The demand has to be there but the laws on running your rentals have made it a less desirable investment and equity growth is limited because of that along with constraints on income