Confidence in the multifamily market among developers rose modestly in the second quarter of 2025, and one reason was the increased federal funding for affordable housing under the One Big Beautiful Act signed into law on July 14.
The optimism was based on the law’s doubling of the amount Fannie Mae and Freddie Mac can invest in low-income housing, according to the National Association of Home Builders’ Multifamily Market Survey (MMS) for 2Q 2025.
Each agency’s allotments shot up from $1 billion each to $2 billion, for a total of $4 billion a year under the Low-Interest Housing and Tax Credit program. The law increases credit allocations by 12% and lowers the bond-financing threshold from 50% to 25%, according to Chad Cummings, CEO of Cummings and Cummings Law, in an interview with GlobeSt.com.
Developers will still face challenges in the form of high interest rates, rising construction costs, limited land availability and restrictive local regulations in some areas. “Even with these headwinds, multifamily starts are becoming less constrained as the number of apartments under construction falls and normalizes. As a result, NAHB is forecasting starts to be modestly higher in 2025 compared to 2024, but well below levels experienced in 2023,” NAHB stated.
NAHB’s Multifamily Production Index (MPI), which asks developers to rate conditions in the markets where they are active as good, fair or poor, is a weighted average of four key segments: rental housing, including garden/low-rise, mid/high-rise and subsidized and built-for-sale housing like condominiums. A score of 50 or higher indicates confidence in the market.
The score for subsidized units jumped 10 points to 61, and for mid/high-rise was up seven points to 36. The component measuring garden/low-rise and built-for-sale units each fell three points year-over-year to 50 and 35, respectively. The overall MPI reading was 46, an improvement of two points year-over-year, but still below the breakeven point of 50. Nevertheless, it was better than the 44 scored in the first quarter, which was three points down year-over-year.
Somewhat better news showed from the Multifamily Occupancy Index (MOI), which asks developers their views on conditions for occupancy of existing rental units, where all three components scored above 50. The component measuring subsidized units rose by five points to 90, while the garden/low-rise sector rose two points to 84. The mid /high-rise component, however, fell three points to 73. The overall MOI index for the second quarter was 82, up one point year-over-year.
In general, survey respondents’ views of the market remained muted. Asked about changes in overall market conditions, 12% thought they were better (14% in 1Q 2025), 65% said about the same (70%), and 23% thought they were worse (16%).
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