Housing sector

Multifamily housing sector sees near-record proposal activity in early 2021

Multi-family housing proposal activity in the first quarter added to the prior quarter’s gains, hitting a near-record net plus/minus index (NPMI) of 71%. Multifamily topped the other four housing submarkets, although all performed well.

In the first three months of the year, housing topped the top 12 markets in the PSMJ Resources Quarterly Market Forecast survey of architecture, engineering and construction (AEC) firms.

PSMJ’s NPMI expresses the difference between the percentage of companies reporting an increase in proposal activity and those reporting a decrease. The QMF has proven to be a strong predictor of market health for the industry since its inception in 2003. A cohesive group of over 300 AEC business executives regularly attend, 183 of whom have contributed to the most recent survey.

Up 13 percentage points from the last quarter of 2020, the multifamily NPMI of 71% tied its third highest score since PSMJ added submarkets to its QMF survey in 2006. In addition to the record 76% in the 1st quarter of 2018 and 72% in the 1st quarter of 2012, Multifamily reached 71% in the 1st quarter of 2015.

The 2021 performance marked a remarkable rebound for Multifamily, which plunged -2% in Q1 2020, its first time in negative numbers since 2010. In fact, prior to the COVID-driven decline a year ago, the NPMI of Multifamily had not fallen below 40% since the 3rd quarter of 2011.

PSMJ Senior Director David Burstein, PE, AECPM, noted that the strong performance of the multifamily sector and the housing sector as a whole illustrates the overall economic health of the industry, as housing growth often also leads to a activity in the commercial, institutional and industrial markets. If Congress passes an infrastructure stimulus bill, Burstein adds, the market could experience even more historic growth.

Among respondents who work in the multi-family sector, only 1% said they saw a decrease in proposal opportunities in Q1, compared to 72% who saw a noticeable increase. The rest said activity was about the same as the previous quarter.

The assisted/independent senior living submarket was another high-flyer in Q1, climbing 32 percentage points NPMI to 59%, tied for 12th among all submarkets. Condominiums rebounded another 15 NPMI points to 30%, its best performance in three years.

The other two Housing markets measured in the PSMJ survey remain in thin air. The residential subdivision market recorded an NPMI of 68%, eclipsing its record Q4 2020 performance by 17 percentage points. Single-family homes fell 8 percentage points from the NPMI to 51% – one of only 3 submarkets to see a decline – but that was still enough for its second-best NPMI performance in QMF survey history .