Multi-family builder and developer confidence was down in the first quarter of 2020, according to the Multi-Family Market Survey (MMS) released by the National Association of Home Builders (NAHB). The Multi-family Production Index (MPS) dropped by 22 points from last quarter’s reading, now at 27—the lowest since Q4 of 2009. The Multi-Family Vacancy Index (MVI) increased by 19 points to 59 since the previous quarter, indicating a rise in vacancies.
The MPI took into consideration three key elements: construction of low-rent units, market-rate rental units and for-sale units.
“Leading up to the coronavirus pandemic, demand for apartments had been solid and development processes were normal,” said Barry Kahn, president of Hettig-Kahn Holdings in Houston and chairman of NAHB’s Multifamily Council. “Now, we are seeing a lot of disruption in the market as builders and developers are trying to navigate the impacts on operations and collections, permitting, inspections and financing.”
“Like other sectors of the housing market, the multi-family market has been greatly affected by the effects of the pandemic,” said NAHB Chief Economist Robert Dietz. “On a positive note, while multif-amily construction has slowed significantly in the spring, rent revenue is coming in above some market participants’ expectations from a few months ago.”