Homebuilders and developers have spent this year anxious about potential tariffs, as they stand to be directly impacted due to higher costs of imported building materials. The National Association of Home Builders (NAHB) has found that, during Q1, multifamily housing developers’ confidence was down year-over-year.
“Like remodelers and single-family builders, multifamily developers are being affected by rising costs and economic policy uncertainty,” said NAHB Chief Economist Robert Dietz in a press release. “In NAHB’s first quarter multifamily survey, more than half of the developers reported that their suppliers have increased prices due to announced, enacted or anticipated tariffs.”
This sentiment data was compiled through NAHB’s Multifamily Market Survey (MMS), the latest edition of which was published on Thurs., May 8. The survey includes two separate indices: the Multifamily Production Index (MPI) and the Multifamily Occupancy Index (MOI), based on the multifamily housing’s industry perception of occupancy rates in existing apartments.
The MPI is down three points year-over-year to 44 (out of 100). It is measured through four multifamily market segments: built-to-rent garden/low-rises, mid/high-rises and then subsidized multifamily houses, in addition to built-for-sale condos. Garden/low-rises dipped one point to 54 in the Q1 MPI. Mid/high-rise units fell the most, dropping eight points to 28, and built-for-sale units declined one point to 38. Subsidized units held flat year-over-year at 50.
The Q1 MOI was more positive than the corresponding MPI; the MOI came down a single point year-over-year and settled at the still positive score of 82 (out of 100).
The MOI is weighted through three averages: occupancy of for-rent garden/low-rises, mid/high-rises and subsidized housing. All three indices were in the positive: garden/low-rise units were 82 (a two-point annual drop), subsidized units dropped five points annually to 89, while mid/high-rises increased annually by two points to 76.
In the press release, Dietz described these results as “consistent with NAHB’s forecast for a modest decline in the rate of multifamily production for the remainder of 2025, followed by a modest recovery in 2026.”
“While occupancy in existing buildings remains strong, multifamily developers are remaining cautious about starting new projects, especially mid/high-rise and condominium projects,” said Debra Guerrero, chairman of NAHB’s Multifamily Council, in a press release.
Guerrero also noted that while “some developers” remain cautious due to tariff uncertainty, this is not the sole cause for lack of confidence.
Previously in April, NAHB’s latest Housing Market Index (HMI), produced with Wells Fargo, also found that homebuilder confidence is in the negative. This came despite a month-over-month bump due to declining mortgage rates.
NAHB Chairman Buddy Hughes testified before Congress this past March about the housing supply gap, which he also attributed to rising construction costs. Hughes cited “Five L’s” as the drivers of costs, those being lending, labor, lumber, lots and laws (or regulatory costs such as restrictive zoning and construction delays).
Guerrero’s comments about developers’ uncertainty echo Hughes’ about builders’. In the press release, she described construction costs, regulatory barriers and financing challenges as the “main headwinds right now” that developers are working within.
For the full NAHB report, click here.