Confidence in the multifamily housing market presented a mixed picture in the fourth quarter, according to the latest Multifamily Market Survey (MMS) from the National Association of Home Builders (NAHB). The survey tracks two key indices: the Multifamily Production Index (MPI) and the Multifamily Occupancy Index (MOI), offering insights into builder sentiment and occupancy trends.
The MPI, which gauges builder and developer confidence in apartment and condo construction on a scale of 0 to 100, rose seven points year-over-year to 48. While this reflects an improvement, it remains below the neutral benchmark of 50, indicating cautious optimism.
Conversely, the MOI, which measures perceptions of occupancy rates in existing apartments, registered at 81, marking a four-point increase compared to the previous year. This strong reading signals that most respondents view apartment occupancy as favorable.
Breakdown of Market Segments
The MPI is based on four key market segments:
- Garden/low-rise rentals: Up one point to 52
- Mid/high-rise rentals: Up 13 points to 39
- Subsidized rentals: Up 11 points to 52
- Built-for-sale (condominiums): Down one point to 42
The MOI reflects trends in three built-for-rent categories, all of which remained above 50:
- Garden/low-rise units: 81 (+1 point)
- Mid/high-rise units: 74 (+10 points)
- Subsidized units: 91 (+3 points)
Market Challenges and Outlook
Despite improving sentiment, developers still face headwinds, including supply chain disruptions and high interest rates, noted Tom Tomaszewski, president of The Annex Group and chairman of NAHB’s Multifamily Council. “Occupancy rates have remained strong, but high operating costs are putting pressure on property owners,” he added.
NAHB Chief Economist Robert Dietz pointed out that the MPI’s continued position below 50 aligns with the decline in multifamily starts in 2023 and 2024. “We anticipate another dip in construction activity in early 2025 before stabilizing later in the year, helped by a low national unemployment rate,” Dietz explained.
The MMS was redesigned last year to provide clearer insights and align with NAHB’s industry sentiment surveys. Until sufficient data is available for seasonal adjustments, comparisons should be made on a year-over-year basis.
For additional information on the MMS, visit www.nahb.org/mms.
For more information on the NAHB Multifamily program, please visit NAHB Multifamily.
About NAHB
The National Association of Home Builders is a Washington-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with 700 state and local home builders associations around the country. NAHB’s builder members will construct about 80% of the new housing units projected for this year.
