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Confidence in the multifamily housing market weakened in this most recent quarter according to results from the Multifamily Market Survey (MMS) by the National Association of Home Builders (NAHB), writes Carmel Ford.

The Multifamily Production Index (MPI), which measures builder and developer sentiment about current production conditions in the apartment and the condominium market, dropped three points to 48 in the third quarter.

The MPI is a weighted average of three key elements of the multifamily market: construction of low-rent units—apartments supported by low-income tax credits or other government subsidy programs; market-rate rental units—apartments built for rent at the price the market will hold; and for-sale units—condominiums. In the third quarter, the component measuring low-rent increased two points to 59, while market rate rental units fell four points to 46 and for-sale units slipped seven points to 39.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, rose two points to 47 in the third quarter. The shifts seen in the both the MPI and the MVI point to affordability concerns arising in the multifamily market. On the production side, the multifamily market (as well as the single-family market) face challenges such as shortages of labor and regulatory costs that are contributing to the pricing out of consumers in the marketplace.

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