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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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Single-Family Starts Weak in July

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High interest rates for construction and development loans as well as ongoing challenges regarding labor shortages and higher prices for many building materials continued to slow the building market this summer.

Overall housing starts decreased 6.8% in July to a seasonally adjusted annual rate of 1.24 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the lowest pace since May 2020.

The July reading of 1.24 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 14.1% from an upwardly revised June figure to an 851,000 seasonally adjusted annual rate. However, on a year-to-date basis, single-family starts are up 11.4%.

The multifamily sector, which includes apartment buildings and condos, increased 14.5% to an annualized 387,000 pace.

The decline in new home construction mirrors our latest builder surveys (the NAHB/Wells Fargo HMI), which show that buyers remain concerned about challenging affordability conditions and builders are grappling with elevated rates for builder loans, a shortage of workers and lots, and supply chain concerns for some building materials.

Better inflation data points to the Federal Reserve moving to cut interest rates possibly as early as September, and with interest rates expected to moderate in the months ahead, this will help both buyers and builders who are dealing with tight lending conditions.

On a regional and year-to-date basis, combined single-family and multifamily starts are 1.3% lower in the Northeast, 5.1% lower in the Midwest, 5.4% lower in the South and 5.1% lower in the West.

Overall permits decreased 4.0% to a 1.40 million unit annualized rate in July. Single-family permits decreased 0.1% to a 938,000 unit rate. Multifamily permits decreased 11.1% to an annualized 458,000 pace.

Looking at regional data on a year-to-date basis, permits are 1.1% higher in the Northeast, 3.2% higher in the Midwest, 0.3% lower in the South and 4.1% lower in the West.

Single-family homes under construction fell back to a count of 653,000—down 4.1% compared to a year ago. The number of multifamily units under construction fell to an 886,000 count—down 13.2% compared to a year ago. The number of multifamily units under construction is now the lowest since July 2022.

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

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