Multifamily Production Expected to Level Off in 2019, Says NAHB
Washington, DC, February 21, 2019-While multifamily housing starts in 2018 came very close to the sector’s 2015 peak, production levels are expected to moderate somewhat in 2019 and will stabilize in a range that that is considered normal, according to data announced by National Association of Home Builders (NAHB).
“Multifamily starts will begin to level off through 2019, edging 2% lower this year at about 379,000 units, approaching the level that was the pre-recession norm,” said Danushka Nanayakkara-Skillington, AVP, Forecasting and Analysis for NAHB. “The great majority of 2018’s units were in buildings with 50 or more apartments.”
While the multifamily recovery led housing out of the recession, the single-family market has not rebounded as strongly. In addition, the rising cost of land and building materials in 2018 and the contraction in the labor force for skilled subcontractors and other construction labor has pushed the cost of a new single-family homes beyond the reach of many young families, many of whom continue to rent.
However, there is growth in single-family rentals-representing 3.67% of the single-family market in 2015, rising to 4.25% by 2017. This growth will take a bite out of both the single-family for-sale sector and the multifamily sector, as young families burdened with student debt, finding it difficult to save for a down payment, opt to rent a single-family home.
In addition, confidence in the market for new multifamily housing weakened slightly in the fourth quarter, according to results from the Multifamily Market Survey (MMS) released by the National Association of Home Builders (NAHB). The MMS produces two separate indices. The Multifamily Production Index (MPI) dropped one point to 47 compared to the previous quarter, indicating weakening confidence. Meanwhile, the Multifamily Vacancy Index (MVI) moved down two points to 45, representing a slight improvement in confidence about the market for existing apartments.