US Multifamily Market Survey Reports Mixed Results for Q3

On Thursday, the National Association of Home Builders (NAHB) released the results of its Multifamily Market Survey (MMS) for Q3. Confidence in the market for new multifamily housing showed mixed results year-over-year in Q3.

The MMS produces two separate indices: the Multifamily Production Index (MPI) had a reading of 40, an increase of 2 points year-over-year, while the Multifamily Occupancy Index (MOI) had a reading of 75, down 7 points year-over-year.

NAHB notes that while demand for rental apartments remains strong enough to support relatively high occupancy rates in existing projects, multifamily builders and developers continue to face many significant headwinds on new projects such as higher construction costs, the cost and access to financing, and the availability of land and regulations.

NAHB forecasts multifamily construction to remain weak for another year as the market works through a substantial number of units under construction, before beginning to move back to long-term trends toward the end of 2025.

Multifamily Production Index (MPI)

The MPI is a weighted average of four key market segments: three in the built-for-rent market (garden/low-rise, mid/high-rise, and subsidized) and the built-for-sale (or condominium) market. The index and all its components are scaled so that a number above 50 indicates that more respondents report conditions as good rather than poor.

• Two of the four components experienced year-over-year increases: The component measuring subsidized units rose 7 points to 46 and garden/low-rise units increased three points to 48.
• Mid/high-rise units remained at 28, while built-for-sale units posted a three-point decline to 29.
• All four MPI components were below the break-even point of 50.

Multifamily Occupancy Index (MOI)

The MOI is a weighted average of the three built-for-rent market segments (garden/low-rise, mid/high-rise, and subsidized). Similar in nature to the MPI, the index and all its components are scaled so that a number above 50 indicates more respondents report that occupancy is good than report it as poor.

• All three components for the MOI experienced year-over-year declines: The component measuring mid/high-rise units dropped eight points to 66, garden/low-rise units fell seven points to 77, and subsidized units decreased three points to 86.
• Nevertheless, all three MOI components were above the break-even point of 50.