Multifamily Market Conditions Tracked by NAHB Survey

The National Association of Home Builders (NAHB) conducts a quarterly Multifamily Market Survey (MMS) to gauge conditions in the apartment and condo market. This survey gathers insights from builders and property managers on two key areas: production (number of new multifamily units being built) and occupancy (rental rates and vacancy levels).

Understanding the Indexes:

The MMS produces two indexes:

• Multifamily Production Index (MPI): This index reflects builder and developer sentiment about current conditions for starting new apartment and condo projects. It’s measured on a scale of 0 to 100, with a score above 50 indicating more positive sentiment than negative.

As of Q1 2023, the NAHB implemented a new methodology for the MPI. It now considers four market segments:

• Garden/low-rise apartments (built-for-rent)
• Mid/high-rise apartments (built-for-rent)
• Subsidized housing (built-for-rent)
• Condominiums (built-for-sale)

The survey asks builders to rate current conditions for starting new projects in their active markets on a scale of “good,” “fair,” or “poor.” The MPI is a weighted average based on these responses.

• Multifamily Occupancy Index (MOI): This index reflects industry perception of occupancy levels in existing apartments. Similar to the MPI, it’s measured on a scale of 0 to 100, with a score above 50 indicating more respondents perceive occupancy to be good than poor.

The new MOI methodology, also implemented in Q1 2023, focuses on three built-for-rent market segments:

• Garden/low-rise apartments
• Mid/high-rise apartments
• Subsidized housing

The survey asks builders to rate current occupancy conditions in their active rental markets on a scale of “good,” “fair,” or “poor.” The MOI is then calculated as a weighted average of these responses.

By tracking these indexes over time, the NAHB MMS provides valuable insights into the health of the multifamily market.