Although multifamily housing starts are expected to slightly moderate this year and in 2019, production levels are projected to remain stable in a range considered normal, according to experts who presented at the National Association of Home Builders (NAHB) International Builders’ Show in Orlando, Fla.

“For the foreseeable future, production of multifamily housing is expected to be running at a trend level where supply is meeting demand,” said NAHB senior economist Michael Neal.

Multifamily starts are expected to edge 2% lower this year to 354,000 units from a projected 360,000 total in 2017 and fall another 3% to 344,000 in 2019.

However, Neal noted this does not indicate weakness in this market segment.

“From 1995 through 2005, multifamily starts averaged 335,000,” he said. “Construction activity during the past four years has been running above this trend, and we are seeing the market stabilizing near more normal production levels.”

One factor contributing to the stabilization of multifamily activity is the low inventory of homes on the for-sale market.

“Fewer homes for sale means that some renter households looking to own will have to rent for longer than they may anticipate,” he said.

Meanwhile, the national rental vacancy rate registered a slight uptick last year, but stands at its low mid-1990s level of 7.5%. Steven E. Lawson, president of The Lawson Companies in Virginia Beach, Va., whose firm builds both affordable and market-rate housing, addressed the predicted increasing demand for affordable rentals as a growing number of households are rent burdened, meaning they are paying too much of their income in rent.

“Demand is far outstripping supply and the supply-side of the equation is constrained by Low-Income Housing Tax Credit pricing, rising construction costs and higher interest rates,” Lawson said.

While the new tax reform law has significantly lowered corporate tax rates, it has also reduced tax credit prices.

“Rising labor and materials costs as well as falling prices for Low-Income Housing Tax Credits have changed the landscape so that some projected affordable projects are no longer viable,” Lawson said. “Moreover, labor shortages are driving up labor costs and spreading out construction schedules.”

On the plus side, the newly enacted pro-growth tax law will mean lower tax rates for most individuals in all income groups, which will put more money into the pockets of hard-working families, including renter households.

Furthermore, NAHB successfully championed the retention of private activity bonds as part of the new tax law, which will enable the Low-Income Housing Tax Credit to maintain its effectiveness as the most indispensable tool for the production of affordable housing.

Regarding residential construction employment, NAHB calculations using employment data from the Bureau of Labor Statistics (BLS) indicate that the number of residential construction jobs rose by 0.7% in December 2017 to 2.8 million on a seasonally adjusted basis. Over the past year, the number of residential construction jobs has risen by 3.2%. Relative to the average number of residential construction jobs between 2001 and 2003 – 2.71 million – the current number of jobs is 102% of that level.

Nationally, however, residential builders are recovering more slowly than residential specialty trade contractors. In December 2017, there were 781,000 residential builder jobs, 1.1% more than last month and 3.6% above its December 2016 level. The current number is about 97% of its 2001-2003 average level of 808,000.

Meanwhile, the number of residential specialty trade contractor jobs totaled 1.97 million in December 2017, 0.5% more than last month and 3.1% above its December 2016 level. The current number is 104% of its 2001-2003 average level of 1.9 million.

Flooring manufacturers are seeing steady business in multifamily.

“In terms of the multifamily market, the Engineered Floors replacement business has been a strong growth segment for the company,” said Tracy Wyrick, national director, builder and multifamily sales, Engineered Floors. “New construction continues to grow in 2018. We are seeing demand for solution-dyed fiber because of our ability to make tweeds and subtle tonal colorations and the color is in the fibers which resists staining and fading that are superior to piece dye carpets.”

Wyrick said carpet in new construction multifamily projects is being used mostly in bedrooms and elsewhere in the home. Engineered Floors’ solution-dyed PureColor technology helps its carpets withstand the high demands of the multifamily environment, helping floors look newer longer.

Flooring trends in the multifamily segment are mirroring many of the same trends that are popular in other sectors of the industry. For example, large format and linear floor tile are being specified and installed, whereas 12 x 24 has become the new minimum format size, according to Dan Butterfield, general manager, builder channel, Dal-Tile. Large format wall tile is becoming more prevalent in the multifamily space as well.

Demand continues for wood-look luxury vinyl plank (LVP) and stone-look luxury vinyl tile (LVT). Multifamily builders can create flooring packages for their customers based on effect, color, tone and style to suit both building style and buyer’s range of tastes. Unlike ceramic tiles and stone flooring, LVT and LVP options mirror the look of ceramic tile effect and stone effect flooring but stay warm under foot and can provide sound abatement benefits. As technologies improve, better wear layers also help to improve product longevity.

Karndean Designflooring is talking to retailers and designers on the commercial side to consider blending floors. “It’s a big trend in the market place now, and we’ve developed products where we understand the coloration and the tonality of them go together as a collection,” said Emil Mellow, director of public relations for Karndean Designflooring. “Typically, with LVT planks, they’re one direction. You lay them down as a wood plank. You’re done. But with our Korlok samples, because they have the right tone, pattern, and feel to them—even between warm and cool tones—you can mix them across a large retail expanse to convey zoning or to give interest to the floor more than just laying a bunch of SKUs down.”

At Surfaces, Engineered Floors introduced six new hard surface collections, which will help to fulfil demand in residential and multifamily channels, according to Brandon Kersey, hard surface and commercial brand manager, Engineered Floors. Three collections are being improved upon and resampled from products formerly carried by Beaulieu America. The other three collections are brand new, including Revotec, which will launch later this spring.

Revotec is a patent-pending luxury vinyl plank that integrates a grout line into the locking system. This waterproof and pet friendly collection will feature eight stone looks and four wood looks and offers a 20 mil. wear layer and an attached cushion.

“Sheet vinyl was your first waterproof flooring, so we are telling that story—there is a need for sheet vinyl,” noted Angela Duke, senior brand manager, hard surface, Mohawk. “People are using it in basement areas, kitchens, laundry rooms and rental properties. It’s one of the most affordable types of flooring they can use.”

At the International National Builder’s Show, Duke said Mohawk showcased sound tests for its sheet vinyl and LVT products. “In multifamily high-rises, they are moving away from carpet and using LVT,” Duke said. “Some of the solutions we are offering, like SolidTech, has a pad attached to it.”

Manufacturers are offering a variety of packages to fulfill demand in every level of the multifamily segment. For example, through the Daltile, Marazzi and American Olean Builder Studio programs, customers have access to complete collections of tile, natural stone and countertops. Butterfield said. “Our programs offer developers dedicated teams and resources, unparalleled availability and reach, and access to products curated and price-tiered specifically for them,” he added.

The Builder Studio programs highlight five tiers of tile price groupings which speak to low, middle and higher-end needs. Butterfield said in addition to tile, stone and countertops developers enjoy several distinct advantages regarding their multi-family projects when working with the Dal-Tile Builder Studio programs, including: domestic manufacturing, a specialized team and more than 300 sales service centers.