Multi-family homebuilding sentiment peaks in seven quarters

Sentiment of multi-family construction reached its highest level in seven quarters in the first quarter of 2021, according to the results of the multi-family market survey released by the National Association of Home Builders.

The Multifamily Production Index, which measures the sentiment of builders and developers on the current market conditions for apartments and condos on a scale of 0 to 100, increased eight points between the fourth quarter of 2020 and 51 in the first quarter. . NAHB says it’s the first time MPI has turned 50 in seven quarters. Meanwhile, the multi-family occupancy index rose one point to 59. A number over 50 indicates that more respondents say conditions improve than conditions deteriorate.

The MPI is a weighted average of three key components of multi-family housing: apartment construction supported by low-income tax credits or other government subsidy programs, rental housing at the rate market and homes for sale – condominiums. The component measuring low-rental housing rose four points to 46 in the first quarter, while the component measuring rental housing at market rates rose six points to 54. Finally, the component measuring housing for sale jumped. from 13 points to 52.

NAHB added a new element to the MMS this quarter: the Multi-Family Occupancy Index. The MOI measures the perception of the multi-family housing industry towards dwellings in existing class A, B and C apartments. It ranges from 0 to 100, with a break-even point of 50. Numbers more high indicate increased occupancy. In the first quarter, the MOI recorded 59. It has improved over the last three quarters.

“The MPI turned the tide and rose sharply in the second quarter of last year, a quarter ahead of a similar turnaround in data on multi-family housing starts,” said NAHB economist Robert Dietz, in a prepared statement. “Since then, multi-family designs have reflected the MPI. The surge we have seen in the MPI for the first quarter of 2021 coincides with a similar increase in multi-family housing starts at a seasonally adjusted annual rate of over 450,000 units. Based on these recent numbers, the NAHB now expects multi-family housing starts to rise this year. “

Indeed, multi-family housing starts increased 5% in April, according to Dodge Data & Analytics.

However, single-family home starts fell 18% in April, reducing total construction starts from 2% in April to a seasonally adjusted annual rate of $ 853.5 billion. Overall, residential building starts fell 12% to a seasonally adjusted annual rate of $ 387.8 billion in April. Total residential starts have increased 24% since the start of the year. Single-family starts rose 31%, while multi-family starts rose 6%.

“The decline in single-family housing starts was inevitable after showing exceptional strength over the past year,” said Richard Branch, chief economist at Dodge Data & Analytics, in a prepared statement. “Rising material prices, supply shortages and the shortage of skilled labor in the construction sector are sure to catch up with housing and ultimately limit the ability of this sector to post the same rate.” expansion this year than before.

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