Confidence in the market for new multifamily housing decreased in the second quarter, according to results from the Multifamily Market Survey (MMS) released y the National Association of Home Builders (NAHB). The MMS produces two separate indices. The Multifamily Production Index (MPI) generated from the survey dropped three points to 48 compared to the previous quarter.
The MPI measures builder and developer sentiment about current conditions in the apartment and condo market on a scale of 0 to 100. The index and all of its components are scaled so that a number below 50 indicates that more respondents report conditions are getting worse than report conditions are improving.
The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units-apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units-apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. The component measuring low-rent units rose three points to 49, the component measuring market rate rental units fell three points to 51 and the component measuring for-sale units dropped seven points to 45.
The MPI softened slightly in the second quarter while multifamily production continued to increase, but it is typical for the MPI to turn one to three quarters before starts. Nevertheless, the MPI remains as strong as it was at any point in 2020 and NAHB expects more apartments to be started in 2021 than in either 2019 or 2020.
For complete results generated from NHB’s MMS, including the history of each index and its components back to the inception of the survey in 2003, please visit NAHB’s MMS web page.