HVAC & Plumbing Contractors NAICS 238220

Nov 10, 2025 - Multifamily Developer Confidence Weak

• Multifamily developer confidence improved in the third quarter of 2025 but remained in negative territory, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) rose six points in Q3 2025 to 46 compared to the third quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by one point to 74 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. While the MPI index indicates weakness in the multifamily construction market, the softness is mostly concentrated in mid-to-high-rise and condominium development, while developers of low-rise and subsidized rental properties are more optimistic.
• North American construction and engineering spending in 2026 is expected to rise 1% after decreasing an estimated 1% in 2025, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. Multifamily construction is expected to decrease by 2% in 2026, amid oversupply in some key markets and weak rent growth. Single-family construction is projected to rise 1% in 2026, as stubbornly high interest rates and elevated home prices reduce demand. Commercial construction spending is forecast to decline by 4% in 2026 as retail store closures surpass openings for the first time in a decade and warehouse vacancies remain high. Lodging construction is expected to decline by 2% in 2026, amid sluggish business travel growth and as financing conditions and maturing debt pose headwinds. Even as vacancy rates remain high, office construction spending growth will rise 7% in 2026, driven by data centers and converting offices to multifamily. Federal funding cuts are projected to result in flat educational construction spending in 2026, while healthcare projects are expected to see a 3% increase.

• HVAC and plumbing contractors may see a reduction in subcontracting work for new single-family homes as some homebuilders pull back to protect profit margins. America’s largest homebuilders are struggling to sell new homes despite offering 4% mortgages and deep discounts, according to The Wall Street Journal. D.R. Horton and Lennar have slashed prices and added incentives, but demand remains weak, pushing unsold inventory to levels last seen in 2009. Builders are slowing construction, with D.R. Horton cutting starts by 21% year over year for the three month period through September. Regional gluts in Texas, Florida, Southern California and Washington, DC reflect rising resale competition, fewer foreign buyers, and economic uncertainty. Investor activity is at a 15-year low, with institutional buyers demanding steep discounts builders won’t meet. New homes, often in less desirable areas and aimed at first-time buyers, are harder to sell.
• US shipment volume of central air conditioners decreased 37.5% year over year in August 2025, according to an October report by the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). Shipments of air-source heat pumps fell 20.3% in August compared to a year earlier. Shipments of residential gas storage water heaters dropped 10.4% in August 2025 year-over-year, and residential electric storage water heater shipments were down 14.7%. August shipments of commercial gas storage water heaters increased 0.2% compared to August 2024, and commercial electric storage water heater shipments rose 10.2%. Gas warm air furnace shipments rose 3.2% in August from a year earlier, and shipments of oil warm air furnaces were up 10.1%.