While financing conditions are improving, apartment market conditions are softening, finds National Multifamily Housing Council’s (NMHC’s) quarterly survey.
Conducted between Sept. 29 and Oct. 14, the survey saw improved market conditions for sales volume as well as debt and equity financing. However, the market tightness index came in well below the breakeven level of 50.
“A softening labor market combined with high levels of new apartment supply is resulting in slower rent growth in many parts of the country,” said Chris Bruen, NMHC’s chief economist and senior director of research. “This continues to be most pronounced in Sun Belt markets, many of which are currently seeing falling rents.”
Bruen noted that a modest decline in long-term interest rates over the past three months, with the 10-year treasury yield down 28 basis points from July—has resulted in improved conditions for debt financing and an uptick in deal flow.
- The Market Tightness Index at 31 indicates looser market conditions. Just under half of the respondents, 47%, reported looser market conditions compared with three months ago, while 9% said they thought conditions were tighter. The remaining 43% cited unchanged conditions compared with July.
- The Sales Volume Index at 59 signals increasing deal flow, continuing the trend for the third consecutive quarter. A greater share of respondents, 30%, reported an increase in sales volume compared with July than those who reported a decrease, 12%. Over half of the respondents, 52%, reported unchanged conditions.
- The Equity Financing Index came in at 57, reflecting more available equity financing. A majority of the respondents, 60%, found equity conditions unchanged from July, while 22% reported equity being more available and 8% less available.
- The Debt Financing Index had a reading of 78, indicating more favorable conditions. Over half of the respondents, 59%, reported it being a better time to borrow than three months ago. Only 3% said they think now is a worse time to borrow, while 30% reported unchanged conditions.