- NAHB’s Multifamily Production Index fell five points year over year to 41 in Q3, and all four of its components are below 50, meaning more developers see conditions as poor than good.
- The Multifamily Occupancy Index slipped five points to 69, still positive, with mid- and high-rise units down seven points to 59 while subsidized units rose two points to 83.
- NAHB’s chief economist said the 2027 forecast shows lower multifamily starts, citing high rates, construction costs that are high relative to rents, and a rising rental vacancy rate.
Multifamily developers are growing more cautious: the National Association of Home Builders’ Multifamily Market Survey shows confidence in new apartment production weakening in the third quarter of 2026.
The Multifamily Production Index came in at 41, down five points from a year ago.
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Every Component Is Negative
A reading below 50 means more respondents report poor conditions than good ones. All four production components declined year over year. Moreover, each remains below that threshold.
By segment, garden/low-rise fell five points to 46. Mid- and high-rise lost four points, reaching 33. Subsidized housing dropped six points to 49. Finally, for-sale condo product fell four points to 31.
Occupancy Holds Up Better
The Multifamily Occupancy Index came in at 69, down five points. Although weaker than a year ago, it still shows owners of existing apartments feel positive about occupancy.
Garden/low-rise fell six points to 70. Meanwhile, mid- and high-rise dropped seven points to 59. Subsidized units moved in the opposite direction, rising two points to 83.
What Developers Say
Kip Lewis chairs NAHB’s Multifamily Council and leads construction management at OCCH in Columbus, Ohio. He blamed higher interest rates, rising building costs and slow approvals. Utility hookups are also taking longer. As a result, many projects now take more time to finish.
Compared with three months earlier, 6% of developers said conditions improved. Another 28% said they worsened, while 66% reported no change.
Why It Matters
Costs remain a common thread. In November, we covered Wall Street Journal reporting on rising building costs. Builders have reported tighter credit for 18 straight quarters, according to NAHB. Meanwhile, materials, labor and borrowing costs continue to climb.
Additionally, five multifamily CEOs told Multifamily Executive that the cost of capital and stalled transactions deserve more attention heading into 2027. We summarized their concerns in November.
What’s Next
NAHB Chief Economist Robert Dietz said the group’s 2027 forecast calls for fewer multifamily starts. However, faster permitting and cheaper development and construction financing could help, he said.
