Market conditions for the apartment industry remained soft in the National Multifamily Housing Council’s (NMHC) October Quarterly Survey of Apartment Market Conditions.
While the market tightness (37), sales volume (45) and equity finance (46) indexes remained below the breakeven level of 50 – with the debt financing index (51) edging just above 50 – there was little change compared with three months earlier.
“The apartment market is headed into a seasonally slow leasing period with new deliveries easing upward pressure on rents and occupancy rates in many markets around the country,” Mark Obrinsky, NMHC chief economist, said in a statement. “The big increase in multifamily starts in 2015 and 2016 is finally filtering through to the marketplace on a broad basis.”
“Leasing activity appears to have picked up in Texas and Florida in the aftermath of Hurricanes Harvey and Irma. Some respondents also noted that fires on the West Coast may be pushing occupancy rates up,” said Obrinsky. “Elsewhere, new deliveries are leading to concessions becoming more commonplace.”
The market tightness index decreased from 42 to 37, marking the eighth consecutive quarter of overall declining conditions. Forty percent of respondents reported looser conditions than three months prior, compared to just 14 percent who reported tighter conditions.
The sales volume index declined two points to 45. Over a quarter (28 percent) of respondents indicated lower sales volume compared to the previous three months, compared to 19 percent who reported higher volume over the past quarter.
The equity financing index remained unchanged at 46, with almost two-thirds (62 percent) reporting unchanged conditions. This marks the eighth consecutive quarter of declining conditions.
The debt financing index increased from 47 to 51, crossing the breakeven level of 50 for the first time since July 2016, indicating improving overall conditions. While most respondents (62 percent) reported unchanged conditions, 14 percent believed that conditions for debt financing had become more favorable. Conversely, 12 percent of respondents reported worse conditions for debt financing compared to three months prior.
The October 2017 Quarterly Survey of Apartment Market Conditions was conducted Oct. 10-17, 2017; 139 CEOs and other senior executives of apartment-related firms nationwide responded.
