Multifamily Confidence Rises Amid Uneven Market Recovery

Multifamily confidence is rising but remains below positive levels, with the MPI at 46.
Occupancy remains strong overall, though the MOI dipped slightly to 74.
Low-rise and subsidized units are outperforming high-rise and condo developments.

Key Takeaways

A Mixed Recovery

Confidence in the multifamily development market rose slightly in Q3 2025, according to the latest Multifamily Market Survey (MMS), reports NAHB. While the overall trend shows improvement, sentiment remains in negative territory for new multifamily production.

The MPI, which gauges developer sentiment for current construction conditions, registered 46—a six-point increase over Q3 2024. However, it remains below the 50 mark that separates positive from negative outlooks.

Segment Breakdown

The MPI saw varied gains across segments:

Garden/low-rise rentals: Up 3 points to 51 (positive territory)
Mid/high-rise rentals: Up 9 points to 37
Subsidized rentals: Rose 9 points to 55
Built-for-sale/condos: Gained 6 points to 35

These figures highlight a continuing divide, with stronger confidence in low-rise and affordable developments versus persistent caution around high-rise and for-sale units.

Occupancy Holding Strong, But Tapering

The MOI, measuring perceptions of current apartment occupancy, fell slightly by one point year-over-year to 74. Despite the dip, the reading still indicates that most owners view occupancies favorably—though it’s the lowest MOI since early 2023.

Segment details include:

Garden/low-rise: 76 (down 1 point)
Mid/high-rise: 66 (unchanged)
Subsidized: 81 (down 5 points)

Headwinds Persist

Despite improved sentiment in some areas, developers face significant challenges. According to NAHB Multifamily Council Chair Debra Guerrero, ongoing regulatory hurdles, rising construction costs, and financing difficulties are weighing on developer optimism. These challenges are especially pronounced in higher-density urban markets.

NAHB Chief Economist Robert Dietz noted the regional divergence: while low-density areas are seeing more multifamily activity, major metros with high-rise construction are seeing slowing momentum.

Market Outlook

While most developers (68%) believe the market is unchanged from three months ago, only 10% say conditions have improved. Meanwhile, 22% report a worsening outlook, highlighting the uneven pace of recovery.

The redesigned MMS survey, updated in 2023, will continue tracking sentiment until there’s sufficient data for seasonal adjustments. For now, year-over-year comparisons remain the most reliable indicator of market trends.

Bottom Line

Multifamily developers are cautiously more optimistic than a year ago, especially in the low-rise and affordable rental segments. But until financing conditions improve and regulatory burdens ease, the broader sector may continue to tread water—especially in the nation’s densest urban centers.