According to the Multifamily Market Survey (MMS) conducted by the National Association of Home Builders (NAHB), there was a year-over-year decline in confidence in the market for new multifamily housing during the second quarter.
Two distinct indices are generated by the MMS.
The Multifamily Production Index (MPI) recorded a reading of 43, which represents a three-point decrease from the previous year.
Conversely, the Multifamily Occupancy Index (MOI) recorded a reading of 74, which represents an eight-point decrease from the previous year.
Regulatory barriers and the challenge of procuring financing are currently limiting the sentiment of multifamily developers.
The 21st Century ROAD to Housing Act, which was recently enacted, is expected to alleviate some of these obstacles; however, the implementation of these policies will require time.
In the interim, the demand for rental housing is being buoyed by the expansion of employment during the second quarter of 2026.
It is evident that the sentiment of multifamily developers is still being affected by supply-side headwinds.
In certain regions of the country, developers are encountering challenges in obtaining approvals and utility connections, in addition to relatively high interest rates and other financing issues.
Additionally, shortages of qualified labor and exorbitant material costs continue to pose substantial obstacles.
Multifamily Production Index (MPI)
The MMS requests that multifamily developers evaluate the current conditions for multifamily starts in markets where they are active as “good,” “fair,” or “poor.” An index and its components are scaled to indicate that a greater number of respondents report conditions as good than poor, with a value exceeding 50.
The MPI is a weighted average of four critical market segments: the built-for-sale (or condominium) market, three in the built-for-rent market (garden/low-rise, mid/high-rise, and subsidized), and one in the built-for-rent market.
During the second quarter, three components experienced year-over-year decreases.
The component measuring subsidized units decreased by seven points to 54, the component measuring mid/high-rise decreased by four points to 32, and the component measuring garden/low-rise decreased by two points to 48.
At the same time, the component that measures units constructed for sale was the sole one to experience an increase year over year, rising by three points to 38.
Multifamily Occupancy Index (MOI)
The survey also requests that multifamily property owners evaluate the current occupancy conditions of extant rental apartments in markets where they are active as “good,” “fair,” or “poor.” The MOI and all of its components are scaled in the same manner as the MPI, with a value greater than 50 indicating that a greater number of respondents report that occupancy is good than subpar.
The MOI is a weighted average of three built-for-rent market segments: subsidized, mid/high-rise, and garden/low-rise.
Despite the fact that all three components experienced a year-over-year decline, they all remained above the break-even point of 50 during the second quarter of 2026.
The subsidized component decreased eight points to 82, the mid/high-rise component decreased 11 points to 62, and the garden/low-rise component decreased seven points to 77.
In 2023, the MMS underwent a redesign to ensure that the results were more easily comprehensible and in accordance with the established format of other NAHB industry sentiment surveys.
Changes in the MMS indices should be assessed solely on a year-over-year basis until there is sufficient data to seasonally adjust the series.
[Read more about this topic on eyeonhousing.org]