Multifamily Sentiment Shows Improvement

According to the National Association of Home Builders’ Multifamily Market Survey (MMS), confidence in the market for multifamily housing increased during the first quarter of 2021.

The survey produces two major indices: the Multifamily Production Index (MPI) and the Multifamily Occupancy Index (MOI). When broken down, the MPI, which historically functions as a leading indictor of the Census Bureau’s multifamily starts series, increased by eight points to 51 in the first quarter survey, whereas the MOI, a new index that replaced the former Multifamily Vacancy Index, increased by one point to 59.

The MPI is used to measure builder and developer sentiments about the conditions of the market for new apartments and condos. This increase to 51 (with anything over 50 signaling that more respondents report improving conditions over worsening ones) is the first time it has gone over 50 in seven quarters.

According to an article written by Paul Emrath for Eye on Housing, “The MPI is a weighted average of separate sentiment indices for each of three key segments of the multifamily housing market: low-rent apartments supported by low-income tax credits or other government subsidy programs; market-rate rental apartments built to be rented at a price the market will support; and for-sale units (i.e., condominiums).  Sentiment in all three segments improved in the first quarter: the MPI component for low-rent apartments increased four points to 46, the component for market rate rental apartments increased six points to 54, and the component capturing sentiment about for-sale units jumped 13 points to 52.”

This perceived improvement in multifamily sentiment comes as the economy begins to fully reopen from the restrictions and shut downs engendered by the pandemic and builders try to meet the currently high demand for housing.

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