While recent reports indicate construction for single-family homes is up, this doesn’t appear to be the case for multifamily development. According to responses to the National Association of Home Builders’ (NAHB) Multifamily Market Survey (MMS) for Q1 2024, confidence in multifamily development decreased during the past year as a result of challenges concerning high interest rates, current lending conditions, and lengthy approval processes.
The MMS produces two separate indices: the Multifamily Production Index (MPI), which had a reading of 47 and was down three points year-over-year, and the Multifamily Occupancy Index (MOI), which had a reading of 83, up one point year-over-year.
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 survey asks multifamily builders to rate the current conditions as “good”, “fair”, or “poor” for multifamily starts in markets where they are active. 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.
All four of the components posted year-over-year declines: the component measuring garden/low-rise declined two points to 55, the component measuring mid/high-rise units fell five points to 36, the component measuring subsidized units dipped one point to 50 and the component measuring built-for-sale units posted a three-point decline to 39.
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