Multifamily developer confidence remains down

HomeNewsMultifamily developer confidence remains down

multifamilyWashington, D.C.—While the two main confidence indexes for multifamily housing increased slightly in the fourth quarter, they both remained in negative territory, according to results from the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB). The MMS produces two separate indices. The Multifamily Production Index (MPI) increased two points to 34 compared to the previous quarter and the Multifamily Occupancy Index (MOI) increased four points to 49.

“It is appropriate that multifamily developers are expressing some caution and that the MPI remains below 50, given the way starts have been outpacing completions,” said Robert Dietz, NAHB chief economist. “This is also consistent with NAHB’s forecast that multifamily production will slow measurably from the very strong rates it sustained through most of 2022.”

The MPI measures builder and developer sentiment about current production conditions in the apartment and condo market on a scale of 0 to 100. The index and all of its components are scaled so that a number below 50 indicates that more respondents report conditions are getting worse than report conditions are improving.

The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units-apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units-apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. The component measuring low-rent units increased five points to 41, the component measuring market rate apartments dropped one point to 38 and the component measuring for-sale units remained even at 23.

The MOI measures the multifamily housing industry’s perception of occupancies in existing apartments. It is a weighted average of current occupancy indexes for class A, B and C multifamily units and can vary from 0 to 100, with a break-even point at 50, where lower numbers indicate decreased occupancy. The MOI increased four points to 49, indicating that the market is close to being stable.

“Many developers continue to see strong demand for multifamily housing, but in some markets supply is catching up to demand,” said Lance Swank, president and co-owner of Sterling Group, Inc., in Mishawaka, Ind., and chairman of NAHB’s Multifamily Council. “In most markets, developers face challenges with regulatory costs and delays and obtaining financing for new construction.”

Must Read

Housing starts decline amid economic uncertainty

Washington, D.C.—Constrained housing affordability conditions due to elevated interest rates, rising construction costs and labor shortages led to a reduction in housing production in...

Decline in mortgage rates helps increase March new home sales

Washington, D.C.—The modest decline in mortgage rates and lean existing inventory helped boost new home sales in March even as builders and consumers contend...

Builder confidence levels indicate slow start for spring housing season

Washington, D.C.—Growing economic uncertainty stemming from tariff concerns and elevated building material costs kept builder sentiment in negative territory in April, despite a modest...

Portobello America achieves Green Squared certification

Baxter, Tenn.—Portobello America, the U.S. business unit of Portobello Grupo, announced it has achieved Green Squared certification, the tile industry's most respected recognition for...

Louisville Tile introduces LavoMOD by Wilcox Fifty Five

Louisville, Ky.—Louisville Tile announced the launch of the Wilcox Fifty Five "LavoMOD,” a new program meticulously designed to revolutionize the installation of porcelain slabs....

Retailers React: What segment of business looks most promising?

Every two weeks, FCNews seeks out flooring retailers across the country to offer their advice on hot topics of the day. This week, we...
Some text some message..
X