Apartment market conditions continued to weaken in the National Multifamily Housing Council’s (NMHC’s) Quarterly Survey of Apartment Market Conditions for April 2024. With the exception of Sales Volume (52), which turned positive this quarter, the Market Tightness (41), Equity Financing (49), and Debt Financing (44) indexes all came in below the breakeven level (50).
“Inflation has come in hotter than expected over the past few months – as the shelter component of CPI continues to lag moderating asking rents – which is expected to push back Fed rate cuts,” noted NMHC Senior Director of Research Chris Bruen. “This has translated to a 40-basis-point (bps) increase in the 10-Year Treasury yield and a decrease in the availability of debt financing over the past three months.”
“On the brighter side, however, this month’s survey results indicate that apartment sales volume has finally increased after seven consecutive quarters of declines. Meanwhile, the U.S. apartment market continues to absorb historic levels of new supply, resulting in rising vacancy rates and decreasing rent growth.”
- The Market Tightness Index came in at 41 this quarter – below the breakeven level (50) – indicating looser market conditions for the seventh consecutive quarter. That said, a plurality of respondents (42%) thought market conditions were unchanged compared to three months ago, while 37% thought markets have become looser. Twenty percent of respondents reported tighter markets than three months ago, up from 5% in January.
- The Sales Volume Index reading of 52 marked the first quarter of increasing deal flow in eight quarters. A majority of respondents (61%) reported sales volume to be unchanged from three months ago. While just 6% of respondents reported higher sales volume in January, 21% reported higher sales volume this quarter. Conversely, 17% thought volume was lower than three months ago.
- The Equity Financing Index came in at 49 – just barely under the breakeven level (50) – marking the ninth consecutive quarter in which equity financing became less available. Up from half of respondents in January, 59% of respondents this round reported availability of equity financing to be unchanged from three months ago. Seventeen percent believed equity financing to be more available, while 18% thought it less available.
- The Debt Financing Index reading of 44 indicated less available debt financing compared to three months ago, a reversal from a reading of 66 last quarter. The majority of respondents (59%) felt debt financing conditions were unchanged, while 24% reported now was a worse time to borrow than three months ago. Thirteen percent of respondents thought conditions were better, down from 45% in January.
About the Survey
The April 2024 Quarterly Survey of Apartment Market Conditions was conducted from April 1-15, 2024. A total of 133 CEOs and other senior executives of apartment-related firms nationwide responded.
Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is where rental housers and suppliers come together to help meet America’s housing needs by creating inclusive and resilient communities where people build their lives. We bring together the owners, managers, developers and suppliers who provide rental homes for 40 million Americans from every walk of life—including seniors, teachers, firefighters, healthcare workers, families with children and many others. NMHC provides a forum for leadership and advocacy that promotes thriving rental housing communities for all. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's Web site at www.nmhc.org.
