Apartment market conditions continued to weaken in the National Multifamily Housing Council's (NMHC) Quarterly Survey of Apartment Market Conditions for January 2024. With the exception of Debt Financing (66), which turned positive this quarter, the Market Tightness (23), Sales Volume (34), and Equity Financing (44) indexes all came in below the breakeven level (50).
“The 10-Year Treasury yield has dropped nearly a full percentage point since October, as core inflation continues to moderate and Fed officials signal likely rate cuts in 2024,” noted NMHC’s Senior Director of Research Chris Bruen. “This has caused the availability of debt financing to increase for the first time in nine quarters.”
“Yet, the apartment market continues to record decreasing rent growth and rising vacancy rates as it absorbs the highest level of new supply in more than thirty years.”
- The Market Tightness Index came in at 23 this quarter – below the breakeven level (50) – indicating looser market conditions for the sixth consecutive quarter. A majority of respondents (59%) reported markets to be looser than three months ago, while only 5% thought markets have become tighter. Thirty-five percent of respondents thought market conditions had gone unchanged over the past three months.
- The Sales Volume Index reading of 34 marked the seventh consecutive quarter of decreasing deal flow. As opposed to in October, when a majority of respondents (57%) reported lower sales volume, a majority of respondents this quarter (54%) reported sales volume to be unchanged from three months ago. Just 6% of respondents thought volume was higher than three months ago, while 37% thought volume was lower.
- The Equity Financing Index came in at 44 – nearly clearing the breakeven level (50) – marking the eighth straight quarter in which equity financing became less available. Fourteen percent reported more availability of equity financing than three months ago, up from 0% last quarter. Half of respondents believed availability to be unchanged from three months ago, while 27% believed equity financing to be less available.
- The Debt Financing Index reading of 66 indicated the first time in ten quarters that debt financing became more available. Nearly half (45%) of respondents reported better debt financing conditions, up from 0% who said the same in October. Thirty-five percent of respondents thought that conditions were unchanged, while 14% thought now was a worse time to borrow than three months ago.
About the Survey:
The January 2024 Quarterly Survey of Apartment Market Conditions was conducted from January 3-17, 2024. A total of 205 CEOs and other senior executives of apartment-related firms nationwide responded.
Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is the leadership of the apartment industry. We bring together the prominent owners, managers and developers who help create thriving communities by providing apartment homes for 40 million Americans, contributing $3.4 trillion annually to the economy. NMHC provides a forum for insight, advocacy and action that enables both members and the communities they help build to thrive. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's website at www.nmhc.org.
