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Aug 13, 2025 - Multifamily Developer Confidence Improves

• Multifamily developer confidence rose in the second quarter of 2025, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) increased two points in Q2 2025 to 46 compared to the second quarter of 2024. The Multifamily Occupancy Index (MOI) rose by one point to 82 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include a tight lending environment, higher borrowing costs, and regulatory difficulties. As multifamily projects currently under construction come online, the NAHB projects a modest gain in multifamily starts in 2025 compared to 2024, but starts will remain well below levels seen in 2023.
• The Dodge Momentum Index (DMI) increased 20.8% in July 2025 to 280.4 (2000=100), up from the revised June reading of 232.1. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component improved by 14.2% and the institutional component increased by 35.1%. Dodge’s associate director of forecasting, Sarah Martin, said, “Planning data skyrocketed in the month of July on the back of several large projects entering the planning queue for data centers, research & development labs, hospitals and service stations. Combined with more organic momentum in planning for hotels, warehouses, and recreational projects, cumulative activity drove record highs in the DMI. After months of wait-and-see due to tariff uncertainty, owners and developers have begun to move forward with projects and assumed higher costs for them. As economic and fiscal uncertainty remains prevalent, volatility in planning activity will remain elevated.”

• The total value of construction put in place declined by 0.4% in June 2025 compared to May, according to the US Census Bureau. Residential construction spending fell 0.7% in June, but spending on nonresidential building projects was mixed. Growth was led by a 1.1% uptick in lodging spending, followed by educational (up 0.2%), and amusement and recreation (+0.2%). However, several segments in the nonresidential building construction subsector saw spending fall in June, including office (down 1.2%), commercial (-0.7%), manufacturing (-0.5%), and healthcare (-0.2%). Associated Builders and Contractors (ABC) Chief Economist Anirban Basu said, “Nonresidential construction spending declined in June and has now contracted in 6 of the past 7 months.” He went on to say, “While ABC members remain optimistic about the second half of the year, according to ABC’s Construction Confidence Index, recent data pertaining to both the construction industry and the broader economy suggest weakness could persist in the months to come.”
• North American construction and engineering spending in 2025 is expected to grow by 1% after increasing an estimated 7% in 2024, according to FMI’s third-quarter 2025 North American Engineering and Construction Outlook. Nonbuilding construction will lead growth in 2025, supported by solid public funding commitments with bipartisan support. Sewage and waste disposal projects will lead infrastructure spending growth in 2025 with a rise of 7%, followed by water supply (6%), power (3%), and highway and street (2%). Single-family construction spending is forecast to rise by 1% in 2025, but headwinds include higher costs due to materials tariffs, tighter immigration enforcement, and a lack of affordability. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 9% in 2025. Nonresidential building construction spending will rise by 1% in 2025, as steady growth in segments including data centers, amusement and recreation, educational, transportation, and communication will be offset by weakness in lodging and commercial.