Multifamily Construction Sentiment Improves in Third Quarter, Despite Headwinds

Economics
Published

Confidence in the market for new multifamily housing improved in the third quarter, according to results from the Multifamily Market Survey (MMS) released today by NAHB.

The MMS produces two separate indices. The Multifamily Production Index (MPI) increased five points to 53 compared to the previous quarter. The Multifamily Occupancy Index (MOI) also increased by five points, up to 75 — the highest reading since the inception of the index in 2003. 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 above 50 indicates that more respondents report conditions are improving than report conditions are getting worse. 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.

All three components increased from the second to the third quarter: The component measuring low-rent units rose six points to 55, the component measuring market rate rental units increased nine points to 60, and the component measuring for-sale units posted a two-point gain to 47. The MOI measures the multifamily housing industry's perception of occupancies in existing apartments. It is a weighted average of current occupancy indexes for class A, B and C multifamily units, and can vary from 0 to 100, with a break-even point at 50, where higher numbers indicate increased occupancy. With the MOI at 75, this is the highest reading since the inception of the series.

“Strong demand and limited inventory of all types of housing are keeping occupancy strong in multifamily properties across the country,” said Justin MacDonald, president and CEO of The MacDonald Companies in Kerrville, Texas, and chairman of NAHB's Multifamily Council. “For that same reason, we have seen robust production of new multifamily properties, although developers continue to deal with very significant supply-side challenges, like finding enough labor, materials and land to build on.”

“The record-level MOI is consistent with the strong multifamily occupancy rates reported by the Census Bureau, which are now higher than they've been since the 1980s,” said NAHB Chief Economist Robert Dietz. “And an MPI back above 50 is consistent with multifamily housing starts, which have been running at a 460,000-plus annualized rate through the first three quarters of 2021 — which should make 2021 the strongest year for multifamily production that we've seen since the tax policy-driven surge of the 1980s. As the economy continues to reopen, housing demand is rising in higher density markets, supporting both multifamily occupancy and production.”

For data tables on the MPI and MOI, visit nahb.org/mms.

For more information on the NAHB Multifamily program, please visit NAHB Multifamily.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Sustainability and Green Building | IBS

Jul 22, 2025

2026 IBS Sustainability & Green Building Scholarship Application Now Open

The NAHB IBS Sustainability and Green Building Scholarship aims to provide emerging green builders exposure to the world of high-performance homes and help them jump-start their professional journey by attending the International Builders’ Show (IBS).

Housing Finance

Jul 21, 2025

House Bill Restores Funding for Several Housing Programs from Trump Budget

The House Appropriations Committee has voted to restore funding for key housing programs that President Trump eliminated in his “skinny budget,” such as housing choice vouchers, project-based rental assistance and the Community Development Block Grant (CDBG) program.

View all

Latest Economic News

Economics

Jul 22, 2025

Top 10 Builder Market Share Across Metros

An earlier post described how the top 10 builders in the country captured a record 44.7% of new single-family closings in 2024. BUILDER Magazine has now released additional data on the top ten builders within each of the 50 largest new home markets in the U.S., ranked by single-family permits.

Economics

Jul 21, 2025

Use of Private Water and Sewer Systems in New Single-Family Homes

The share of new single-family homes built with individual septic systems declined slightly in 2024 compared to the previous year, while the share of homes served by private wells remained steady.

Economics

Jul 21, 2025

Sales of Lower-Priced New Single-Family Homes Declined Over the Past Five Years

From 2020 to 2024, sales of lower-priced new homes declined significantly as the market moved toward higher-priced segments. Rising construction costs—driven by inflation, supply chain disruptions, and labor shortages—as well as higher regulatory costs, made it increasingly difficult for builders to construct affordable homes.