Multifamily Developer Confidence Falls in the First Quarter
In the first quarter of 2025, multifamily developer confidence declined, as reported by the National Association of Home Builders (NAHB) through its Multifamily Market Survey (MMS). The Multifamily Production Index (MPI), which gauges developers’ sentiment on current construction conditions, dropped three points to 44, marking the seventh consecutive quarter below the neutral threshold of 50. This trend suggests a continued contraction in multifamily construction activity. Conversely, the Multifamily Occupancy Index (MOI), reflecting current rental occupancy rates, remained robust at 82, slightly down from 83 in the same quarter of the previous year, indicating sustained demand for rental units.
The decline in the MPI aligns with NAHB’s forecast of a modest decrease in multifamily production throughout 2025, with expectations of a gradual recovery in 2026. Developers are contending with several challenges, including escalating construction costs, regulatory hurdles, and limited financing options. Additionally, over half of the surveyed developers reported that suppliers have increased prices due to announced, enacted, or anticipated tariffs, adding further pressure to project budgets. Despite these obstacles, the strong occupancy rates suggest that demand for multifamily housing remains high, potentially setting the stage for a rebound in construction activity as market conditions stabilize.
