Commercial Real Estate News
U.S. Multifamily Housing Confidence Declines in Early 2025
Confidence in the U.S. multifamily housing market weakened in the first quarter of 2025, according to the latest Multifamily Market Survey (MMS) released by the National Association of Home Builders (NAHB). Both key indicators of the survey--tracking builder sentiment and occupancy levels--declined year-over-year, signaling a more cautious approach among developers amid economic and regulatory pressures.
The Multifamily Production Index (MPI), which gauges builder and developer sentiment about current production conditions in the apartment and condominium sectors, dropped three points to a reading of 44, indicating more respondents view conditions as poor than good. An MPI reading below 50 reflects overall pessimism in the market.
The MPI is a weighted average of four market segments:
- Garden/low-rise units dipped slightly to 54,
- Mid/high-rise units saw a sharp decline of eight points to 28,
- Subsidized units held steady at 50, and
- Built-for-sale (condominiums) edged down one point to 38.
Meanwhile, the Multifamily Occupancy Index (MOI), which assesses perceptions of current occupancy rates in existing rental properties, registered a still-strong 82, down just one point from the same period last year. A reading above 50 indicates favorable occupancy conditions.
The MOI components also showed resilience:
- Garden/low-rise occupancy slipped two points to 82,
- Mid/high-rise occupancy rose two points to 76,
- Subsidized unit occupancy fell five points but remained high at 89.
"While occupancy in existing buildings remains strong, multifamily developers are remaining cautious about starting new projects, especially mid/high-rise and condominium projects," said Debra Guerrero, chairman of NAHB's Multifamily Council. "Construction costs, regulatory barriers, and financing challenges are the main headwinds, with added uncertainty surrounding tariffs."
NAHB Chief Economist Robert Dietz added, "The MPI of 44 supports our forecast for a modest slowdown in multifamily construction through the rest of 2025, with a possible rebound in 2026. Rising costs and economic policy uncertainty are weighing on the market. More than half of developers surveyed reported supplier price hikes related to current or anticipated tariffs."
The MMS was redesigned in 2023 to align more closely with other NAHB industry sentiment indices. As the new series builds historical depth, trends should be viewed year-over-year until seasonal adjustments become statistically viable.
