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Multifamily confidence increased in second quarter, but vacancies also rose

Multifamily continues its climb back to pre-pandemic levels

A new report from the National Association of Home Builders shows confidence in the market for new multifamily housing increased in the second quarter but still remains weak.

The Multifamily Production Index rose 10 points to 37, which is still below the break even point of 50, indicating that more builders and developers viewed conditions as weaker than stronger, NAHB said.

On the other hand, the Multifamily Vacancy Index increased three points, to 62, indicating there are more vacancies.

“The MPI and MVI readings this quarter reflect a multifamily housing market that is continuing its climb back to pre-pandemic levels,” the report said. “The recovery is further evidenced by July multifamily start numbers from the Census Bureau, which show a clear acceleration in starts activity from previous months.”

According to the Census Bureau, the July rate for authorizations of units in buildings with five units or more was 467,000, a big change from June’s 378,000.

In the MPI, the component measuring low-rent units rose 10 points to 42; the component measuring market rate rental units increased five points to 34; and the component measuring for-sale units rose to 35.

“It is important to note, however, that demand remains subdued in the multifamily market due to higher unemployment numbers,” the report said. “Furthermore, builder and developers are still facing challenges with material costs.”

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