WASHINGTON, D.C. — Apartment markets expanded in three of four areas in the January National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions, indicating a slight moderation of the pace of improvement. Only the sales volume index (44) dropped below 50, with market tightness (51), equity financing (55) and debt financing (71) showing continued expansion.
"The apartment markets continue to show strength in most areas," said Mark Obrinsky, NMHC's SVP of Research and Chief Economist. "Last year's ramp-up in new construction finally signaled complete recovery on the supply side. Even so, demand for apartment residences remains strong enough to absorb the increase in deliveries—and then some, as occupancy rates edged up a bit more."
"The stronger tone of recent economic indicators could mean even more good news for apartments. Improvement in employment—and income—prospects should spur increased household formation, especially among those who have delayed that step for economic reasons. A large portion of any increase in new households is likely to be headed for apartments," said Obrinsky.
Key findings include:
The Market Tightness Index fell from 52 to 51. More than half (58 percent) of respondents reported unchanged conditions, and slightly over one-fifth (22 percent) saw conditions as tighter than three months ago. Looser conditions were reported by 20 percent of respondents. This is the fourth consecutive quarter where the index has indicated overall improving conditions.
The Sales Volume Index dropped from 58 to 44. This is the first time since January 2014 that the index fell below the breakeven level of 50. About one in five (19 percent) of respondents reported higher sales level than three months ago, a decline from 27 percent of respondents the previous quarter.
The Equity Financing Index rose by one point to 55. The majority of respondents (55 percent) continue to report that the availability of equity financing is unchanged from three months ago—the sixth consecutive survey where a majority of respondents report unchanged conditions.
The Debt Financing Index remained unchanged at 71. Almost half of respondents (45 percent) reported better conditions for debt financing, unchanged from October. The same number (45 percent) believed that conditions are unchanged and only 3 percent felt that conditions were worse.
The Debt Financing Index remained unchanged at 71. Almost half of respondents (45 percent) reported better conditions for debt financing, unchanged from October. The same number (45 percent) believed that conditions are unchanged and only 3 percent felt that conditions were worse.