Consumer confidence in the market for new multifamily housing (which includes the apartment and condo housing sectors) has weakened in the first quarter of 2019, according to the National Association of Home Builders (NAHB).
The NAHB’s Multifamily Production Index (MPI), which measures builder and developer sentiment about current conditions in the multifamily market on a scale between 0 to 100, has dropped seven points from the previous quarter, to a reading of 40. This represents the lowest reading since the third quarter of 2010.
Meanwhile, the Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies in existing properties, rose three points to 48, with higher numbers indicating more vacancies.
"Builders and developers are being cautious to see what happens with projects that were recently completed," said Gary Campbell, chairman of NAHB’s Multifamily Council. "However, we're seeing that developers are reasonably optimistic about what's ahead for units on the affordable end of the spectrum."
"The recent weakness in the MPI is consistent with our forecast for 2019," said Robert Diaz, chief economist at NAHB. "Multifamily housing starts experienced a gain in 2018. Even after a slight decline for starts in the first quarter of 2019, permit growth is occurring, and production should level off moving forward. The market remains dominated by rental production, with a 94% share at the start of 2019.”