Builders and developers signal caution on multifamily conditions

“The decline in the MPI indicates incipient caution on the part of multifamily developers,” said NAHB chief economist Robert Dietz. “This caution has not shown up yet in the multifamily starts rate, which remains quite strong, but the MPI typically leads changes in starts by one to three quarters.”

Despite inching down one point to 68, NAHB’s multifamily occupancy index (MOI) remained consistent with the recent high rates of occupancy reported by the Census Bureau. The MOI measures the multifamily housing industry’s perception of occupancies in existing apartments. Numbers above the break-even point of 50 indicate increased occupancy.

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“Strong demand is still keeping multifamily developers fairly optimistic in many parts of the country, but high construction costs and their impact on affordability are making some developers increasingly cautious,” said Sean Kelly, chairman of NAHB’s Multifamily Council.