NAHB survey reveals the latest
Results from the Multifamily Market Survey (MMS) released by the National Association of Home Builders (NAHB) revealed positive confidence in the market for new multifamily housing for the second quarter of 2023.
Two separate indices were produced: the Multifamily Production Index (MPI) and the Multifamily Occupancy Index (MOI). In the new report, the former had a reading of 56, while the latter was 89.
The MPI shows the weighted average of four key market segments (three in the built-for-rent market and the built-for-sale market) and measures builder and developer sentiment on the current conditions of the production in the apartment and condo market on a scale of 0 to 100. A number that goes over 50 would indicate there are more respondents perceiving the conditions to be good.
Meanwhile, the MOI is the weighted average of three built-for-rent market segments and measures the perception of occupancies of the multifamily housing industry in existing apartments on a scale of 0 to 100. A number that is above 50 indicates there are more respondents perceiving the occupancy to be good.
According to the NAHB, it redesigned the MMS in the first quarter of 2023 to make it more similar to the NAHB/Wells Fargo Housing Market Index for single-family housing. For this quarter’s results, the redesigned MMS asked builders and developers to compare the current market conditions in their areas to three months prior on a scale of “better,” “about the same,” or “worse.” Seventy per cent (70%) of respondents said that the market was “about the same” as three months earlier.
“Multifamily housing demand remains solid, however, there are headwinds limiting new development in many parts of the country,” said Lance Swank, chairman of NAHB’s Multifamily Council and president and CEO of Sterling Group, Inc. in Mishawaka, Ind. Among these “headwinds” are the reduced availability of credit for new construction, increased operating costs, setbacks on the approval of projects, and property, casualty and liability insurance.
Robert Dietz, chief economist at NAHB, said it forecasts that multifamily housing will start to decline by the second half of 2023 due to local concerns on supply, as well as financing conditions.
“Demand for multifamily housing is being supported by the low availability and high cost of single-family homes on the market, although multifamily development faces many of the same supply-side challenges as single-family,” said Dietz.
