Confidence in the Market for New Multifamily Housing Falls Into Negative Territory in 2023Q4

On Thursday, the National Association of Home Builders (NAHB) released the 2023Q4 results of its Multifamily Market Survey (MMS), which revealed that confidence in the market for new multifamily housing was in negative territory for the quarter. The MMS produces two separate indices: The Multifamily Production Index (MPI) was at a reading of 41—below the break-even point of 50—while the Multifamily Occupancy Index (MOI) reading was 77.

The NAHB notes that the financing of new multifamily projects continues to be difficult due to tight lending standards and the high cost of development loans. Given that, along with the historically high level of supply for multifamily units under construction, NAHB forecasts a major pullback in multifamily starts for 2024.

The NAHB reminds readers that the MMS survey was redesigned in 2023Q1 in order to make it easier to interpret and more similar to the NAHB/Wells Fargo Housing Market Index. Because the previous version of the MMS series can no longer be used to compare with this quarter’s results, the redesigned tool asks builders and developers to compare market conditions in their areas to three months earlier, using a “better,” “about the same,” or “worse” scale. Fourteen percent of respondents said that the market is “better” than it was three months earlier, while 63% said it is “about the same” and 23% said it is “worse.”