Apartment market conditions declined in the National Multifamily Housing Council’s (NMHC’s) most recent Quarterly Survey of Apartment Market Conditions. All four indices – Market Tightness (40), Sales Volume (41), Equity Financing (48) and Debt Financing (32) – came in below the breakeven level (50), signaling less favorable conditions this quarter.
“Census data show that more apartments were delivered in 2024 than in any other year since 1974,” noted NMHC’s Economist and Senior Director of Research, Chris Bruen. “This surge in new supply continues to put downward pressure on rent growth and occupancy, especially in sunbelt markets.”
"Federal Reserve officials, meanwhile, signaled in December that they are expecting short-term interest rates to remain higher for longer in their effort to combat inflation, now projecting a median of just two rate cuts in 2025. The 10-Year Treasury yield, as a result, rose 58 basis points between October and January, leading to a higher cost of both debt and equity capital in the apartment market and lower deal flow."
- The Market Tightness Index came in at 40 this quarter – below the breakeven level of 50 – indicating looser market conditions for the tenth consecutive quarter. Slightly over half (52%) of respondents thought market conditions were unchanged relative to three months ago, while a third of respondents thought conditions have become looser. Fourteen percent of respondents reported tighter market conditions than three months prior.
- The Sales Volume Index reading of 41 reflects decreasing deal flow over the past three months. This marks the first pullback after three straight quarters of increasing deal flow. While 48% of respondents thought sales volume went unchanged over the past three months, 34% (up from 10%) thought sales volume was lower than in October, while just 16% (down from 43%) of respondents thought volume was higher.
- The Equity Financing Index came in at a reading of 48, reversing again after last month brought the first index value above 50 since January 2022. Up slightly from last quarter, 60% of respondents thought the availability of equity financing went unchanged over the last three months. Eighteen percent of respondents thought equity was less available (up from 6% in October), while 14% thought equity was more available (down from 32% in October).
- The Debt Financing Index saw the largest shift from last quarter – a reading of 32, down from 77 in October – clearly signaling worse conditions for debt financing compared to three months ago. A plurality of respondents (49%) reported that now was a worse time to borrow than three months ago (up from 8%) while 14% thought it a better time to borrow (down from 62%). Thirty-four percent of respondents thought debt financing conditions were unchanged, up from 25% in October.
About the Survey:
The January 2025 Quarterly Survey of Apartment Market Conditions was conducted from January 6 – January 17, 2025. 131 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.
