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Low-Rise Multifamily Shows Strength at End of 2025; Other Segments Weak – Eye On Housing

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Even though garden/low-rise continues to be strong, overall confidence in the market for new multifamily housing decreased year-over-year in the fourth quarter, according to the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB). The MMS produces two separate indices. The Multifamily Production Index (MPI) had a reading of 45, down three points year-over-year, while the Multifamily Occupancy Index (MOI) had a reading of 74, down seven point year-over-year.

Multifamily developers are somewhat less optimistic than they were at this time last year, except in the market segment for garden/low-rise apartments. This suggests that the 2025 trend of gains in multifamily market share for outlying metro and non-metro counties—where garden and low-rise structures are more common—is likely to continue in 2026.

Elevated construction costs and the local regulatory environment continue to be major headwinds to faster growth. While interest rates eased slightly in 2025, they still need to come down further to significantly spur new construction.

Multifamily Production Index (MPI)

The MMS asks multifamily developers to rate the current conditions as “good”, “fair”, or “poor” for multifamily starts in markets where they are active.  The index and all its components are scaled so that a number above 50 indicates that more respondents report conditions as good rather than poor. The MPI is a weighted average of four key market segments: three in the built-for-rent market (garden/low-rise, mid/high-rise, and subsidized) and the built-for-sale (or condominium) market.

The component measuring garden/low-rise was the only one to experience an increase year-over-year in the fourth quarter of 2025, rising two points to 54. This component has been above 50 every quarter in 2025. The other three components experienced year-over-year declines during the quarter. The component measuring mid/high-rise fell eight points to 31, the component measuring built-for-sale units dropped six points to 36, and the component measuring subsidized units decreased five points to 47.

Multifamily Occupancy Index (MOI)

The survey also asks multifamily property owners to rate the current conditions for occupancy of existing rental apartments in markets where they are active as “good”, “fair”, or “poor”.  Like the MPI, the MOI and all its components are scaled so that a number above 50 indicates more respondents report that occupancy is good than poor.  The MOI is a weighted average of three built-for-rent market segments (garden/low-rise, mid/high-rise, and subsidized). 

All three MOI components experienced year-over-year decreases in the fourth quarter of 2025; the mid/high-rise component plummeted 12 points to 62, the garden/low-rise component decreased five points to 76, and the subsidized component dipped three points to 88. Nevertheless, all three MOI components remain well above the break-even point of 50.

The MMS was re-designed in 2023 to produce results that are easier to interpret and consistent with the proven format of other NAHB industry sentiment surveys. Until there is enough data to seasonally adjust the series, changes in the MMS indices should only be evaluated on a year-over-year basis.

Please visit NAHB’s MMS web page for the full report.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Third Quarter 2025 Multifamily Construction Data – Eye On Housing

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According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts increased during the third quarter of 2025. For the quarter, 119,000 multifamily residences started construction. Of this total, 114,000 were built-for-rent. This built-for-rent total was 31% higher than the third quarter of 2024. This marks a significant increase, and it is possible these numbers will be revised lower in future Census data given other multifamily data reporting.

The market share of rental units of multifamily construction starts was 95% for the third quarter. A historical low market share of 47% for built-for-rent multifamily construction was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period.

For the third quarter, there were 5,000 multifamily condo unit construction starts, a decrease from a year ago.

An elevated rental share of multifamily construction is holding the typical apartment size below levels seen during the pre-Great Recession period. According to the third quarter 2025 data, the average square footage of multifamily construction starts decreased to 1,052 square feet. The median declined to 1,006 square feet. These measures are consistent with the elevated share of multifamily built-for-rent construction.



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2024 Multifamily MAI – Eye On Housing

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Following the release of the 2024 single-family MAI last week, the National Association of Home Builders developed the Multifamily Market Association Index (MAI) to measure how closely multifamily building permits in metro areas follow national patterns. By comparing local and national trends, the MAI helps industry leaders and forecasters better understand and predict housing market activity.

Nationally, multifamily permits displayed little variation over the second half of the 2010s. Permit levels began growing significantly during the pandemic and peaked at nearly 700,000 in 2022. However, both 2023 and 2024 reported declines, with 2024 having 496,000 units permitted, closer to pre-2020 levels.

The MAI uses 2015-2024 multifamily permit data to create five- and ten-year correlations for each metropolitan statistical area (MSA), showing their similarity to national patterns. The five- and ten-year correlations are then averaged, with more weight given to the five-year correlation. The resulting correlation coefficient ranges from negative one to positive one, indicating the strength and direction of the relationship between local and national trends.

The MSA that had the highest associations with the national trend was Clarksville, TN-KY with a correlation of 0.97, while the MSA that recorded the lowest association with the national trend was College Station-Bryan, TX. The scatter plot below illustrates the linear relationship between these MSAs and the national trend. For example, when national permit levels rose near 700,000, Clarksville (positive correlation) also had relatively high permit levels of around 2,500. At the same time, College Station-Bryan (negative correlation) had relatively low permits of about 230.

Of the 387 metro areas included in the multifamily MAI, the average correlation is 0.17. In total, 241 MSAs had a correlation greater than zero, and 145 MSAs had less than zero. One MSA had an average correlation of zero (Morgantown, WV), with no multifamily permits in the last five years. A positive correlation is expected as MSAs in total accounted for almost 95% of all multifamily permits in the U.S. on average between 2015 and 2024. A complete list of the MSA correlations is found here and shown on the map below.

Additionally, below are the top ten and bottom ten in terms of the Multifamily MAI.

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Multifamily Developer Confidence Increases in Third Quarter, But Still in Negative Territory

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Confidence in the market for new multifamily housing increased year-over-year in the third quarter, according to the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB). The MMS produces two separate indices. The Multifamily Production Index (MPI) had a reading of 46, up six points year-over-year, while the Multifamily Occupancy Index (MOI) had a reading of 74, down one point year-over-year.

The MPI and MOI are giving a mixed picture, creating a bifurcation of the multifamily market.  While MPI is still in negative territory, developers of low-rise market-rate and subsidized rental properties express increased optimism, with both components above 50 for the quarter.  Weakness is concentrated in the mid-to-high-rise and condominium developments which tend to be common in high-density metro areas.  This is consistent with NAHB’s Home Building Geography Index where multifamily construction activity is growing in areas with low population densities but weakening in the larger metros. 

Even though MOI is in positive territory and existing apartment owners are positive about occupancy overall, this is the lowest reading since NAHB redesigned the survey starting in Q1 2023.  Sentiment for mid/high-rise apartment occupancy is noticeably weaker than it is for the other two rental market segments.

Multifamily Production Index (MPI)

The MMS asks multifamily developers to rate the current conditions as “good”, “fair”, or “poor” for multifamily starts in markets where they are active.  The index and all its components are scaled so that a number above 50 indicates that more respondents report conditions as good rather than poor. The MPI is a weighted average of four key market segments: three in the built-for-rent market (garden/low-rise, mid/high-rise, and subsidized) and the built-for-sale (or condominium) market.

All four components experienced year-over-year increases in the third quarter of 2025: both the components measuring mid/high rise and subsidized units jumped up nine points to 37 and 55, respectively, the component measuring built-to-sale units increased six points to 35, and the component measuring garden/low-rise units increased three points to 51.

Multifamily Occupancy Index (MOI)

The survey also asks multifamily property owners to rate the current conditions for occupancy of existing rental apartments, in markets where they are active, as “good”, “fair”, or “poor”.  Like the MPI, the MOI and all its components are scaled so that a number above 50 indicates more respondents report that occupancy is good than as poor.  The MOI is a weighted average of three built-for-rent market segments (garden/low-rise, mid/high-rise and subsidized). 

Two of the three MOI components experienced year-over-year decreases in the third quarter of 2025; the component measuring subsidized units fell by five points to 81 and the garden/low-rise component dipped one point to 76.  Meanwhile, the component measuring mid/high-rise units was unchanged at 66.  All three MOI components remain well above the break-even point of 50.

The MMS was re-designed in 2023 to produce results that are easier to interpret and consistent with the proven format of other NAHB industry sentiment surveys.  Until there is enough data to seasonally adjust the series, changes in the MMS indices should only be evaluated on a year-over-year basis.

Please visit NAHB’s MMS web page for the full report.

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Single-Family Starts Edge Higher but Affordability Challenges Persist

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Single-family housing starts posted a modest gain in July as builders continue to contend with challenging housing affordability conditions and a host of supply-side headwinds, including labor shortages, elevated construction costs and inefficient regulatory costs.

Led by solid multifamily production, overall housing starts increased 5.2% in July to a seasonally adjusted annual rate of 1.43 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The July reading of 1.43 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.8% to a 939,000 seasonally adjusted annual rate and are down 4.2% on a year-to-date basis. The multifamily sector, which includes apartment buildings and condos, increased 9.9% to an annualized 489,000 pace.

The slowdown in single-family home building has narrowed the home building pipeline. There are currently 621,000 single-family homes under construction, down 1% in July and 3.7% lower than a year ago. This is the lowest level since early 2021 as builders pull back on supply.

On a regional and year-to-date basis, combined single-family and multifamily starts were 10.2% higher in the Northeast, 17.7% higher in the Midwest, 2.4% lower in the South and 0.5% lower in the West.

Overall permits decreased 2.8% to a 1.35-million-unit annualized rate in July. Single-family permits increased 0.5% to an 870,000-unit rate and are down 5.8% on a year-to-date basis. Multifamily permits decreased 8.2% to a 484,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 16.6% lower in the Northeast, 9.1% higher in the Midwest, 3.4% lower in the South and 5.1% lower in the West.

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June Single-Family Permits Slumps, Multifamily Gains

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Single-family housing permits continued a downhill trend for the sixth month in a row. The continuous decline in single-family permits highlights persistently weak housing demand, tied to affordability challenges like high mortgage rates. Builders appear cautious amid economic uncertainty, labor constraints, and rising inventories. The uptick in multi-family permits suggests a potentially stabilizing trend, though it’s important to note its volatility. The housing market’s mixed signals—weak single-family coupled with some resilience in multi-family—could mean continued drag on residential investment and the broader economy this year.

Over the first six months of 2025, the total number of single-family permits issued year-to-date (YTD) nationwide reached 485,935. On a year-over-year (YoY) basis, this is a decline of 5.6% over the June 2024 level of 514,728. For multifamily, the total number of permits issued nationwide reached 244,812. This is 2.9% higher compared to the June 2024 level of 237,935.

Year-to-date ending in June, single-family permits were up in one out of the four regions. The Midwest posted a small increase of 1.8%. The Northeast was 1.7% lower, the South was down by 6.5%, and the West was down by 8.1% in single-family permits during this time. For multifamily permits, three out of the four regions posted increases. The Midwest was up by 22.4%, the West was up by 8.0%, and the South was up by 7.1%, Meanwhile, the Northeast declined steeply by 30.0%, driven by the New York-Newark-Jersey City, NY-NJ MSA which declined by 40.0%.

Between June 2025 YTD and June 2024 YTD, 15 states posted an increase in single-family permits. The range of increases spanned 19.9% in Hawaii to 0.2% in Kentucky. The remaining 35 states and the District of Columbia reported declines in single-family permits with the District of Columbia reporting the steepest decline of 24.2%.

The ten states issuing the highest number of single-family permits combined accounted for 63.0% of the total single-family permits issued. Texas, the state with the highest number of single-family permits, issued 78,104 permits over the first six months of 2025; this is a decline of 8.0% compared to the same period last year. The second highest state, Florida, decreased by 10.6%, while the third highest, North Carolina, posted a decline of 0.9%.

Between June 2025 YTD and June 2024 YTD, 29 states recorded growth in multifamily permits, while 21 states and the District of Columbia recorded a decline. Iowa (+165.5%) led the way with a sharp rise in multifamily permits from 1,178 to 3,128, while Alabama had the largest decline of 49.6% from 1,788 to 901.

The ten states issuing the highest number of multifamily permits combined accounted for 61.8% of the multifamily permits issued. Over the first six months of 2025, Florida, the state with the highest number of multifamily permits issued, experienced an increase of 25.0%. Texas, the second-highest state in multifamily permits, saw an increase of 14.1%. California, the third largest multifamily issuing state, increased by 11.5%.

At the local level, below are the top ten metro areas that issued the highest number of single-family permits.

For multifamily permits, below are the top ten local areas that issued the highest number of permits.

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Multifamily Developer Confidence Increases in Second Quarter

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Confidence in the market increased for multifamily developers in the second quarter of 2025, according to  the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB).  The MMS produces two separate indices.  The Multifamily Production Index (MPI) was up two points year-over-year to 46.  The Multifamily Occupancy Index (MOI) had a reading of 82, up one point year-over-year.

Multifamily developer confidence experienced a slight increase compared to last year, most notably from the subsidized subcomponent.  This is due in part to optimism surrounding the expansion of federal affordable housing resources flowing from the recent congressional reconciliation bill.  However, high interest rates, rising construction costs, limited land availability and restrictive local regulations are still significant issues in certain parts of the country.  Even with these headwinds, multifamily starts are becoming less constrained as the number of apartments under construction falls and normalizes.  As a result, NAHB is forecasting starts to be modestly higher in 2025 compared to 2024, but well below levels experienced in 2023.

Multifamily Production Index (MPI)

The MMS asks multifamily developers to rate the current conditions as “good”, “fair”, or “poor” for multifamily starts in markets where they are active.  The index and all its components are scaled so that a number above 50 indicates that more respondents report conditions as good rather than poor. The MPI is a weighted average of four key market segments: three in the built-for-rent market (garden/low-rise, mid/high-rise, and subsidized) and the built-for-sale (or condominium) market.

Two components experienced year-over-year increases: the component measuring subsidized units jumped 10 points to 61 and the components measuring mid/high-rise rose seven points to 36.   The component measuring garden/low-rise and built-to-sale units both fell three points year-over-year to 50 and 35, respectively.

Multifamily Occupancy Index (MOI)

The survey also asks multifamily property owners to rate the current conditions for occupancy of existing rental apartments, in markets where they are active, as “good”, “fair”, or “poor”.  Like the MPI, the MOI and all its components are scaled so that a number above 50 indicates more respondents report that occupancy is good than report it as poor.  The MOI is a weighted average of three built-for-rent market segments (garden/low-rise, mid/high-rise and subsidized). 

Two of the three MOI components experienced year-over-year increases in the second quarter of 2025.  The component measuring subsidized units rose by five points to 90 and the garden/low-rise component increased two points to 84.  Meanwhile, the component measuring mid/high-rise units fell three points to 73.  Nevertheless, all three MOI components remain well above the break-even point of 50.

The MMS was re-designed in 2023 to produce results that are easier to interpret and consistent with the proven format of other NAHB industry sentiment surveys.  Until there is enough data to seasonally adjust the series, changes in the MMS indices should only be evaluated on a year-over-year basis.

Please visit NAHB’s MMS web page for the full report.

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Single-Family Starts Weaken in June as Affordability Challenges Persist

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Single-family housing starts declined in June to the lowest rate since July 2024 as elevated interest rates, rising inventories and ongoing supply-side issues continue to act as headwinds for the housing sector.

Due to a solid increase in multifamily production, overall housing starts increased 4.6% in June to a seasonally adjusted annual rate of 1.32 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The June reading of 1.32 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.6% to an 883,000 seasonally adjusted annual rate and are down 10% compared to June 2024. The multifamily sector, which includes apartment buildings and condos, increased 30% to an annualized 438,000 pace.

Single-family building conditions continued to weaken in June as housing affordability challenges caused builder traffic to move lower as buyers moved to the sidelines. Rising levels of resale inventory are also a headwind for the industry.

Single-family home building in the South is down 12.4% on a year-to-date basis, far outpacing declines in the Northeast and the West. However, single-family home building is up 10% on a year-to-date basis in the Midwest, where housing affordability conditions are generally better than much of the nation.

On a regional and year-to-date basis, combined single-family and multifamily starts were 28.8% higher in the Northeast, 13.1% higher in the Midwest, 8.1% lower in the South and 0.6% lower in the West.

Overall permits increased 0.2% to a 1.40-million-unit annualized rate in June. Single-family permits decreased 3.7% to an 866,000-unit rate and are down 8.4% compared to June 2024. Multifamily permits increased 7.3% to a 531,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 16.9% lower in the Northeast, 8.2% higher in the Midwest, 3.3% lower in the South and 3.7% lower in the West.

The declines for single-family home building have caused the number of single-family homes under construction to level off. There are currently 622,000 single-family homes under construction, which is 6% lower than a year ago. The number of apartments under construction in June, 739,000, is 18.8% lower than a year ago.

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2024 Multifamily Construction: Units Completed Reaches 38-year High

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Multifamily units completed in 2024 recorded their highest level since 1986 at 608,000 units, according to NAHB analysis of the Census Bureau’s Survey of Construction. For the eighth consecutive year, most multifamily units were in buildings with 50 or more units (these will be labeled as high-density buildings).

As shown below, this trend is relatively new. Dating back to the earliest estimates in the series (1972), most multifamily units were historically located in buildings with less than 50 units (low-medium density buildings). Of the total 608,000 multifamily units completed in 2024, 330,000 (54%) were in high-density buildings while the remaining 278,000 (46%) were in low-medium density buildings.

Regional Distribution

The South continued to be the leading region in terms of units completed, rising from 212,000 in 2023 to 292,000 completions in 2024. The South accounted for 48% of the total number of completions; the West held 27% (163,000), the Midwest 14% (87,000), and the Northeast 11% (68,000). Singularly, the South was the only region where the number of units completed in low-medium density buildings outpaced the number in high-density buildings. The South had 147,000 completions in low-medium density compared to 145,000 units in high-density.

Conversely, in the Midwest and Northeast the number of units in high-density buildings nearly doubled those of low-medium density buildings. For the Midwest, there were 58,000 units in high-density buildings and 29,000 low-medium density units. The Northeast had 45,000 units in high-density buildings and 23,000 low-medium density units. The West featured an almost 50/50 split with 82,000 high-density units and 81,000 low-medium density.

Built-for-Rent

Among multifamily units completed in 2024, 95% were built-for-rent at a level of 580,000. Over half of these units (55%) were in a building with 50 units or more. This is a seismic shift towards high-density buildings, as this share was only 25% in 2004. Over the past twenty years, there has consistently been a falling share of units in buildings with 10-19 units, as the share in 2004 was 24%, while in 2024 this share only accounts for 4% of completed units.

Built-for-Sale

The number of multifamily units built-for-sale rose from 20,000 in 2023 to 29,000 in 2024. High-density buildings continued to be the primary type of building where these units were built, with 40% of built-for-sale units being completed in buildings with 50+ units. This share was up from 28% in 2023. The largest loss in market share for multifamily built-for-sale units was for buildings with 10-19 units, dropping from 23% in 2023 to just 13% in 2024.

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Sharp Drop in Multifamily Production Brings Overall Housing Starts Down

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A sharp decline in multifamily production pushed overall housing starts down in May, while single-family output was essentially flat due to economic and tariff uncertainty along with elevated interest rates.

Overall housing starts decreased 9.8% in May to a seasonally adjusted annual rate of 1.26 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The May reading of 1.26 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 0.4% to a 924,000 seasonally adjusted annual rate and are down 7.3% compared to May 2024. The volatile multifamily sector, which includes apartment buildings and condos, decreased 29.7% in May to an annualized 332,000 pace.

On a year-to-date basis, single-family starts are down 7.1%. In contrast, multifamily 5-plus unit starts are up 14.5% as more prospective home buyers remain on the sidelines helping rental demand.

Single-family permits and construction starts are down on a year-to-date basis for 2025 for what has been a disappointing spring housing market, given ongoing elevated mortgage interest rates, challenging housing affordability conditions led by higher construction costs, and macroeconomic uncertainty. NAHB is forecasting that 2025 will end with a decline for single-family housing starts.

The number of single-family homes currently under construction totaled 623,000 homes as of May. This is 1.3% lower than April, 7.6% lower than a year ago and 25% lower than the post-Great Recession peak level in June 2022. There were 752,000 apartments under construction in June, 4.6% lower than May and 18.2% lower than a year ago.

On a regional and year-to-date basis, combined single-family and multifamily starts were 21.1% higher in the Northeast, 10.8% higher in the Midwest, 6.8% lower in the South and 1.6% lower in the West.

Overall permits decreased 2% to a 1.39-million-unit annualized rate in May. Single-family permits decreased 2.7% to an 898,000-unit rate and are down 6.4% compared to May 2024. Multifamily permits decreased 0.8% to a 495,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 17.2% lower in the Northeast, 6% higher in the Midwest, 5.4% lower in the South and 3.7% lower in the West.

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