The Multifamily Market Survey (MMS) from the National Association of Home Builders (NAHB) shows developer confidence is deteriorating. The Multifamily Production Index (MPI), which measures current production conditions through a weighted average of for-rent apartments as well as for-sale condos, was at a reading of 41. The Multifamily Occupancy Index (MOI) measures the existing occupancy perception and was at 77.
“An MPI below 50 at the end of 2023 is consistent with the weakness in multifamily starts the Census Bureau reported in January,” said NAHB Chief Economist Robert Dietz, in a release. “NAHB projects that multifamily production will be down in 2024, as the number of apartments currently under construction is near its highest level since 1973.”
The latest housing starts data from the U.S. Census Bureau reports multifamily starts (5 units or more) to be down nearly 36% in January from December and down almost 38% year-over-year. Meanwhile, permits are also down 9% month-to-month and roughly 27% year-over-year.
“Tight lending standards and the high cost of development loans continue to impede the financing of new multifamily projects,” said Lance Swank, Chairman of NAHB’s Multifamily Council, in the release. “Developers in many parts of the country have also become cautious as they see a substantial number of new apartments being delivered and more that are ready to come online.”