Sentiment dips but multifamily developers remain largely optimistic
Growing demand has boosted developers’ sentiment about current conditions in the apartment and condo market, according to the National Association of Home Builders.
NAHB’s Multifamily Production Index (MPI) improved by one point to 54 in the fourth quarter of 2021, while the Multifamily Occupancy Index (MOI) decreased six points to 69 quarter over quarter. Despite the drop, the MOI remains as high as it’s been at any time before the second quarter of 2021.
NAHB chief economist Robert Dietz explained that the January MPI reading is consistent with Census production statistics, which show 750,000 apartments under construction and new apartments being started at a rate of over 500,000 per year.
“The modest decline in the very strong MOI number is not likely to result in any significant change in Census rental occupancy rates, which are still rising and will likely remain high given the strong 69 index number from our survey,” Dietz added.
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Two of the three components increased in Q4: The component measuring low-rent units declined seven points to 48, the component measuring market-rate rental units increased one point to 61, and the component measuring for-sale units saw a six-point gain to 53.
“Multifamily developers remain largely optimistic about this segment of the market,” said Sean Kelly, chairman of NAHB’s Multifamily Council. “Demand in many parts of the country has been strong enough to compensate for the rising costs of land, labor and materials.”
