Steel Markets
Multifamily Construction Ends Q4 on a High
Written by David Schollaert
February 25, 2022
The outlook for multifamily construction closed the year on a positive note, as confidence in the market for new multifamily housing improved in the fourth quarter of 2021, according to the National Association of Home Builders’ (NAHB) Multifamily Market Survey (MMS).
The MMS’s two separate indices saw mixed results. The Multifamily Production Index (MPI) gained one point to 54 versus the previous quarter, while the Multifamily Occupancy Index (MOI) fell six points to 69.
The MPI measures builder and developer sentiment about current conditions in the apartment and condo market, while the MOI measures the multifamily housing industry’s perception of occupancies in existing apartments. Both are measured on a scale of 0 to 100, and a result above 50 indicates growth.
The MPI is a weighted average of three key elements of the multifamily housing market: low-rent units-apartments, market-rate rental units-apartments, and condominiums. Two of the three components increased from Q3 to Q4 2021. The component measuring market rate rental units inched up one point to 61, while the component measuring for-sale units posted a six-point gain to 53. The component measuring low-rent units fell seven points to 48 during the same period.
“Multifamily developers remain largely optimistic about this segment of the market,” said Sean Kelly, NAHB’s Multifamily Council. “Demand in many parts of the country has been strong enough to compensate for the rising costs of land, labor and materials.”
The MOI measures current occupancy indexes for class A, B and C multifamily units. Even though the index fell six points to 69, it remains as high as it’s been at any time prior to the second quarter of 2021.
“The strength of the MPI is consistent with Census production statistics, which show 750,000 apartments under construction and new apartments being started at a rate in excess of 500,000 per year,” said Robert Dietz, NAHB’s chief economist. “The modest decline in the very strong MOI number is not likely to result in any significant change in Census rental occupancy rates, which are still rising and will likely remain high given the strong 69 index number from our survey.”
About the report: The Multifamily Market Survey (MMS) is based on a quarterly survey of NAHB multifamily builders and property managers. The survey is designed to monitor conditions for multifamily production (starts) and multifamily rental occupancy in the current versus preceding quarter as well as in the next six months.
By David Schollaert, David@SteelMarketUpdate.com
David Schollaert
Read more from David SchollaertLatest in Steel Markets
GrafTech’s Q2 loss widens in ‘challenging’ business environment
GrafTech cited a “challenging” part of the business cycle as its net loss widened in the second quarter.
CRU: Poor steel margins continue to push down raw material prices
Both iron ore and coking coal prices fell this week because of resistance from buyers. Iron ore prices have continued to fall throughout the past week, following sharp declines in steel prices in China, given no new policy announcement from the ‘Third Plenum’ meeting.
Op-Ed: The myth of the Mexican steel surge
We have heard ominous warnings about a flood of Mexican steel threatening the US market. It's the kind of rhetoric that gets thrown around often with little regard for the facts. The reality is that the Mexican steel surge is simply not happening, and the US steel industry has consistently maintained a significant trade surplus in finished products with Mexico. In 2023 alone, this surplus exceeded $3 billion.
CRU: Demand weakness continues to weigh on global sheet markets
Demand has remained persistently weak across the globe for sheet steel, weighing on prices. US HR coil prices fell the furthest this week as high-volume, low-priced deals were transacted as mills looked to fill order books and competed with one another amid relative demand weakness. Meanwhile, European prices were also down due to low demand […]
Influx of coated products fuels recent import surge
Steel imports fell back in May from April’s recent high but remained elevated compared to the levels seen over the past year. A deeper dive into the data confirms what SMU has been hearing from sources: Coated sheet is driving the recent rise in overall import levels.