Builders and developers are feeling increasingly wary about the multifamily sector’s prospects, survey results released Thursday by the National Association of Home Builders (NAHB) revealed.

The trade group’s third-quarter Multifamily Production Index, which gauges industry sentiment on the apartment and condo market on a scale of 0 to 100, fell five points year over year to 41. Any reading under 50 indicates majority pessimism among builders and developers.

The Multifamily Occupancy Index, which tracks perceptions of occupancies in existing apartments, registered a rosier 69 reading, but it also fell five points on an annual basis during the quarter.

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Kip Lewis, who chairs the NAHB’s Multifamily Council, pointed to elevated interest rates, regulatory and logistical hurdles and “construction costs that are high relative to rents” as reasons for the gloomy outlook.

NAHB Chief Economist Robert Dietz wasn’t surprised by the survey results given “supply-side headwinds such as high interest rates and a rising rental vacancy rate.”

“Due to the headwinds still facing the industry, NAHB’s 2027 forecast shows a decline for multifamily starts,” Dietz added. “And although the administration’s regulatory reform efforts are helping to ease some cost pressures, the multifamily sector would still benefit from an expedited permit process and lower rates on development and construction loans.”

Data unveiled this week by RentCafe suggests downbeat industry sentiment may persist.

The apartment listings platform owned by Yardi Systems estimates that 442,395 new apartments will open in 2026. That would represent a 27% decrease from the 605,768 opened in 2025.

But sharp regional divides inform the apartment data.

RentCafe expects the South will account for 47% of all new apartment openings by the time 2026 ends. That compares to an estimated 12% in the Midwest and 23% in the West region.

While RentCafe predicts the Northeast will account for 18% of all apartment openings in 2026, the region has bucked the national trend by increasing its building activity this year.

“In contrast to the construction boom in the South and West, the Northeast has historically had fewer apartments come to market due to complex permitting processes, restrictive zoning and high construction costs,” the RentCafe report stated. “However, that’s now changing: Projects that broke ground during the recent demand surge are now set to open, giving renters in the region more choices than they’ve had in years.”