The National Association of Home Builders (NAHB) announced a new-look Multifamily Market Survey (MMS) for the first quarter of 2023. The Multifamily Production Index (MPI) and the Multifamily Occupancy Index (MOI) are the two indices produced from the MMS.
The MPI, which measures builder and developer sentiment, and the MOI, which measures multifamily occupancy on existing apartments, follow a 0 to 100 scale where a number above 50 indicates conditions are good, as reported by respondents.
The MPI had a reading of 50, while the MOI was at 82 in the first quarter. Both indices measure the for-rent segment consisting of garden/low-rise, mid-rise/high-rise and subsidized, but the MPI also considers for-sale units like condos.
“Garden/low-rise units had the strongest production index of all four sectors covered in the survey, while subsidized units had the strongest occupancy index,” said Lance Swank, Chairman of NAHB’s Multifamily Council, in a release. “However, higher interest rates and increased construction costs are negatively impacting projects in certain parts of the country.”
NAHB Chief Economist Robert Dietz said: “NAHB’s current forecast has multifamily starts declining by more than 10% per year in 2023 and 2024. Commentary from multifamily builders indicates that it has become more difficult to obtain loans for multifamily development as a result of tightening financial conditions due to actions of the Federal Reserve, which reduce future apartment construction.”