Multifamily developers share less confidence in the state of their market sector than they did a year ago, a National Association of Home Builders’ (NAHB) Multifamily Market Survey found. High construction costs, elevated project borrowing and debt expense, stagnant rental growth and shaky consumer confidence are each culprits.
The survey has two indices, one for multifamily production and the other for multifamily occupancy. The production index had a reading of 45, down three points year-over-year, and the occupancy index fell seven points to 74.
The production index, which surveys four submarket segments — condos, garden/low-rise, mid/high-rise and subsidized — indicates that the garden/low-rise submarket was the strongest. The occupancy index, which tracks the same submarkets except for condos, also found that garden/low-rise properties inspired greater confidence.
Mid- and high-rise units delivered the lowest confidence for both the production and occupancy indexes, with readings of 31 and 62, respectively.
“Both the MPI and MOI in the fourth quarter indicated that the multifamily market is substantially stronger for garden and low-rise buildings than for mid- and high-rise,” said NAHB Chief Economist Robert Dietz. “This suggests that the 2025 trend of gains in multifamily market share for outlying metro and non-metro counties – where garden and low-rise structures are more common – is likely to continue in 2026.”
The lower readings for these taller multifamily properties also reflect relatively higher construction costs. For example, structured parking, often a necessary feature in high-rise multifamily buildings, is an added cost that isn’t typically associated with garden-style buildings.
With construction and borrowing costs remaining elevated and rents stagnating, developing properties with structured parking can be difficult in many markets right now.
The Yardi Matrix multifamily national report, released in January, additionally found that multifamily rents fell during the last four months of 2025. For the full year, national rents were flat, with a 0% growth rate. The markets that experienced the biggest increase in rents were New York City, Chicago, Minneapolis-St. Paul, San Francisco and Kansas City, while Phoenix, Denver, Las Vegas, Dallas and Portland had the biggest drops in rent.
Consumer confidence is also relatively weak, falling to its lowest point in Q4 2025 in over three years.
The survey found that the vast majority of multifamily developers, 68%, expected the market to stay about the same in the near future, while 14% see it improving and 18% expect it to get worse.
“Elevated construction costs and the local regulatory environment continue to be major headwinds to faster growth. While interest rates have eased slightly, they still need to come down further to significantly spur new construction,” said Debra Guerrero, chairman of NAHB’s Multifamily Council.
Despite a dip in multifamily builder confidence, NAHB’s data indicates that homebuilders are more pessimistic about the market. Homebuilder confidence dropped to 37 in January, with 65% of builders offering incentives and 40% reporting price cuts.
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