US Multifamily Developer Confidence Declines in Q3

On Thursday, the National Association of Home Builders (NAHB) released the results of its Q3 Multifamily Market Survey (MMS), showing that developer confidence in new multifamily housing weakened year-over-year.

The survey produces two separate indices. The Multifamily Production Index (MPI) posted a reading of 41, down 5 points year-over-year, while the Multifamily Occupancy Index (MOI) registered a reading of 69, also down 5 points from a year earlier.

NAHB attributed the weakening in developer sentiment to high interest rates, construction costs that remain elevated relative to rents, and difficulties obtaining project approvals and connections to roads and utilities. These challenges have contributed to longer project completion times.

Multifamily Production Index (MPI)

All four MPI components declined year-over-year in Q3, with each remaining below the break-even threshold of 50.

The component measuring subsidized units fell 6 points to 49, while garden/low-rise units declined 5 points to 48. The mid/high-rise and built-for-sale components each dropped 4 points, to readings of 33 and 31, respectively.

Multifamily Occupancy Index (MOI)

Two of the three MOI components declined year-over-year in Q3, although all three remained above the break-even threshold of 50.

The mid/high-rise component fell 7 points to 59, while garden/low-rise units declined 6 points to 70. In contrast, the component measuring subsidized units rose 2 points to a reading of 83.