NAHB said multifamily developers are less confident in the new construction market because of difficult loan terms due to high interest rates.
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Multifamily developers are less confident in the new construction market as high interest rates make lending terms difficult.
The National Association of Home Builders’ Multifamily Market Survey, which consists of two separate surveys, found that the Multifamily Production Index scored 47 out of 100, down 3 percentage points from the same period last year. The multifamily occupancy index, which measures owner sentiment in existing apartment buildings, rose one percentage point to 83, showing demand for apartments remains high, according to first-quarter data released Thursday.
“Multifamily developers are concerned about rising construction and development loan rates and tightening loan conditions in the current market,” said Tom Tomaszewski, president of Annex Group and chairman of the NAHB Multifamily Committee. “There are still many areas across the country where developers are having a hard time getting their projects approved.”
While occupancy remains high, that may change as more rental units under construction are completed and more apartments become available.
“Owners of existing apartments report that occupancy remains strong, but when more of the more than 900,000 units currently under construction are Occupancy rates are likely to decline as they come online. “NAHB currently expects multifamily starts to decline 28% this year as developer activity slows. “
The occupancy index is scored out of 100, with a score above 50 indicating a positive attitude.
The Multifamily Production Index measures four segments of the market: three for rentals and one for sales (apartments). All four components declined year-on-year, with the index measuring mid-rise/high-rise residential units down 5 percentage points to 36, the index measuring subsidized units down 1 percentage point to 50, and the index measuring built-for-sale units down 3 percentage points. percentage points to 39.
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