Washington, D.C.—Multifamily developer confidence weakened in the second quarter compared with a year earlier, according to the National Association of Home Builders.
The NAHB Multifamily Market Survey produces two indices that measure production and occupancy conditions.
The Multifamily Production Index fell three points from a year earlier to 43. The Multifamily Occupancy Index declined eight points to 74.
Multifamily production declines
The MPI measures builder and developer sentiment about current production conditions in the apartment and condo market. The index uses a scale of zero to 100. A reading below 50 means more respondents view conditions as poor than good.
The MPI measures four market segments. Three cover built-for-rent properties while one measures the built-for-sale, or condominium, market.
The garden and low-rise component fell two points to 48. The mid- and high-rise component declined four points to 32. Subsidized units dropped seven points to 54.
Built-for-sale units provided the only increase, rising three points to 38.
Apartment occupancy remains positive
The MOI measures the multifamily industry’s view of occupancy conditions in existing apartments. A reading above 50 indicates more respondents view occupancy as good than poor.
Despite its decline from a year earlier, the overall reading of 74 indicates apartment owners remain positive about occupancy.
All three built-for-rent components declined compared with a year ago but remained above 50.
Garden and low-rise units fell seven points to 77. Mid- and high-rise units declined 11 points to 62. Subsidized units dropped eight points to 82.
“Multifamily developer sentiment is currently constrained by regulatory barriers and difficulty obtaining financing,” said Kip Lewis, director of construction management at OCCH in Columbus, Ohio, and chairman of NAHB’s multifamily council. “The recently enacted 21st Century ROAD to Housing Act should provide some help with respect to these challenges, but these policies will take time to implement. Meanwhile, rental housing demand is being supported by improving job growth during the second quarter of 2026.”
NAHB also pointed to financing costs, regulatory issues and construction challenges as obstacles for developers.
“It is clear that supply-side headwinds continue to weigh on multifamily developer sentiment,” said Robert Dietz, NAHB chief economist. “In addition to relatively high interest rates and other financing issues, developers are finding it difficult to obtain approvals and utility connections in some parts of the country. High material prices and shortages of skilled labor also remain significant impediments.”
NAHB redesigned the survey in 2023 to make the results easier to interpret. The organization also aligned the survey with the format of its other industry sentiment studies.
NAHB said changes in the MPI and MOI should only be evaluated on a year-over-year basis until enough data are available for seasonal adjustments.
The survey also asked developers to compare current conditions with those three months earlier. In the second quarter, 14% said conditions had improved while 15% said they had worsened. Most respondents saw little change. Seventy-one percent said market conditions were about the same as they were three months earlier.