Builder Confidence in the Market for New Multifamily Housing Declines in Q2 2021

According to the results released by the National Association of Home Builders’ (NAHB) Multifamily Market Survey (MMS), confidence in the market for new multifamily housing decreased in Q2 of 2021. The Multifamily Production Index (MPI), which was generated from the survey dropped 3-points to a reading of 48 compared to the previous quarter.

The MPI measures builder and developer sentiment about current 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: The component measuring low-rent units rose three points to 49; the component measuring market rate rental units fell three points to 51; and the component measuring for-sale units dropped seven points to 45.

The MPI softened slightly in Q2 2021, while multifamily production continued to increase, but it is typical for the MPI to turn one to three quarters before starts. Nevertheless, the MPI remains as strong as it was at any point in 2020 and NAHB expects more apartments to be started in 2021 than in either 2019 or 2020.