Survey Shows Greater Confidence in Market-Rate Apartments Than Low-Rent Units
NAHB advises builders to be cautious given rising interest rates, high construction costs.
Survey results from the National Association of Home Builders (NAHB) last week showed confidence in building new apartment homes was mixed, giving a slight nod to market-rate development and less faith in low-rent units compared to the month earlier.
“Overall, rental demand remains solid,” Sean Kelly, EVP of LNWA in Wilmington, DE and chairman of NAHB’s multifamily council, said in prepared remarks. “Rising mortgage interest rates mean low vacancy in multifamily rental.”
“Additionally, recent US Treasury guidance related to American Rescue Plan funding creates clarity in the production pipeline for apartments supported by the Low-Income Housing Tax Credit.”
NAHB Chief Economist Robert Dietz said in prepared remarks, “With rising interest rates and high construction costs, multifamily developers need to be cautious given recession concerns. However, the multifamily market is showing growth this year, with 5+ unit permits and starts up 18% on a year-to-date basis.”
The MMS produces two separate 100-point indices. The Multifamily Production Index (MPI) measures builder and developer sentiment about current production conditions in the apartment and condo market on a scale of 0 to 100.
Two of the three MPI components saw decreases compared to the first quarter: The component measuring low-rent units fell four points to 45, and the component measuring for-sale units declined 11 points to 33. Meanwhile, the component measuring market rate apartments increased by three points to 52.
The Multifamily Occupancy Index (MOI) measures the multifamily housing industry’s perception of occupancies in existing apartments. It fell eight points to 60.