Multifamily Market Survey for Q4: Indexes Up but Remain in Negative Territory

The National Association of Home Builders (NAHB) today (2-23-23) released its Multifamily Market Survey for 2022Q4. The two main confidence indexes for multifamily housing increased slightly, but both remain in negative territory. The Multifamily Production Index (MPI) increased 2 points from Q3 to a reading of 34. The Multifamily Occupancy Index (MOI) increased 4 points from Q3 to a reading of 49.

According to the NAHB, even though multifamily developers continue to see strong demand, the supply in some markets is starting to catch up as evident by multifamily starts greatly outpacing completions. The NAHB is forecasting that multifamily production will slow over the next two years from the very strong rates experienced through most of 2022.

The NAHB points to significant headwinds facing developers, such as regulatory costs which can account for over 40% of the cost of development and the inability of multifamily developed to obtain financing for new construction due continuing rising interest rates.