NAHB Releases Positive Multifamily Construction Data
The National Association of Home Builders released data last week from its Multifamily Market Survey that revealed that market confidence in new multifamily housing has increased in the first quarter of 2021.
The MMS produces two separate indices: The Multifamily Production Index increased eight points to 51 compared to the previous quarter and the Multifamily Occupancy Index increased one point to 59.
This is the first time the MPI has been over 50 in seven quarters.
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 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 or condominiums.
According to the NAHB, all three increased in the first quarter: the component measuring low-rent units rose four points to 46, the component measuring market rate rental units increased six points to 54 and the component measuring for-sale units jumped 13 points to 52.
Also this quarter, though, the report introduced the MOI, which replaced the Multifamily Vacancy Index. 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 a reading of 59, the MOI has improved over the last three quarters.
“The MPI reversed trend and rose strongly in the second quarter of last year, one quarter before a similar turn-around in the multifamily housing starts data,” said NAHB Economist Robert Dietz.
“Since then, multifamily starts have mirrored the MPI. The surge that we saw in the MPI for the first quarter of 2021 coincides with a similar surge in multifamily starts to a seasonally adjusted annual rate of more than 450,000 units. Based on these recent numbers, NAHB now expects a gain in multifamily starts this year.”
Recent NAHB Data
In February the NAHB dubbed the home remodeling market “more than fully recovered” from the COVID-19 pandemic. The comments were made during an online press conference hosted by the association during the 2021 International Builders’ Show.
In addition to looking at current numbers, the NAHB forecasts that the residential improvements sector will continue to grow at a healthy pace for the next two years.
More specifically, over the next two years the NAHB predicts that remodeling spending for owner-occupied, single-family homes will increase 4% this year and another 2% next year.
Other professionals at the event moted that demand and backlog remain high, and the biggest factors that are prohibiting the sector to grow more are materials prices and labor shortages.
