Builders’ confidence in new multifamily housing ticked up during the second quarter of this year, according to a new report, though developers still see the sector as relatively weak.

The report comes from the National Association of Home Builders (NAHB), which regularly compiles a “Multifamily Production Index, or MPI, to gauge “developer sentiment about current conditions in the apartment and condo market.” The MPI uses a scale that runs between 0 and 100, and during the second quarter of this year it rose 10 points, to 37.

While that is certainly an improvement over the prior quarter, the NAHB noted in the report that it “is still below its break even point of 50.”

“The index and all of its components are scaled so that a number below 50 indicates that more respondents report conditions are getting worse than report conditions are improving,” the report further explains.

In other words, builder confidence is improving but continues to be low.

On the other hand, while confidence has dropped off during the coronavirus pandemic, it has not reached the depths to which it fell during the Great Recession.

A graph from the NAHB showing builder confidence between 2003 and the present. Credit: NAHB

The NAHB also measures vacancies and puts together a “Multifamily Vacancy Index,” or MVI, that similarly operates on a scale of 0 to 100. Higher numbers indicate more vacancies, and in the second quarter of this year the MVI rose three points, to 62 — meaning vacancies are up.

Both the MPI and the MVI are based on a quarterly survey of multifamily developers, and during the latest round the NAHB also asked respondents about tenants missing rent payments — a nod to the large numbers of people who haven’t been able to pay for their housing during the coronavirus pandemic. Overall, the NAHB found that 7.9 percent of tenants missed their last rent payment.

Though the NAHB’s findings indicate confidence is on an upward trajectory, both indices suggest that sentiments among those in the multifamily sector are ultimately not as buoyant as those in real estate sales — where bidding wars have proliferated and sales are skyrocketing.

Still, the NAHB framed the report as an overall positive assessment of the multifamily sector.

“The MPI and MVI readings this quarter reflect a multifamily housing market that is continuing its climb back to pre-pandemic levels,” the NAHB report states. “The recovery is further evidenced by July multifamily start numbers from the Census Bureau, which show a clear acceleration in starts activity from previous months.”

Email Jim Dalrymple II

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×