WASHINGTON, DC—All four indexes of the National Multifamily Housing Council's latest quarterly survey of apartment market conditions remained below the break-even level of 50 for the fourth consecutive quarter, thus indicating continued softening conditions, NMHC said Thursday. However, all four indexes represented an improvement over the previous survey, conducted this past April.
Posting the biggest improvement was the Sales Volume Index, which rose from 30 in the previous survey to 47 in July's survey, conducted earlier this month among 123 senior executives of apartment-related firms. Twenty-seven percent of respondents reported higher sales volume than three months prior, compared to 33% reporting lower volume.
The Market Tightness Index inched up from 41 to 43, after posting a bigger quarterly gain three months ago, when it rose from 25. Almost half of respondents, or 48%, reported unchanged conditions. Thirty-three percent of respondents said conditions were looser than three months ago, while the remaining 19% reported tighter conditions. This marks the seventh consecutive quarter of overall declining conditions for this index, according to NMHC.
The survey's Equity Financing Index increased four points to 46, compared to a nine-point increase between January and April. Twenty-four percent of executives surveyed said equity financing was less available than three months earlier, while 16% thought that equity financing was easier to come by compared to three months ago.
The Debt Financing Index increased from 41 to 47, after rising 27 points from January's level of 14, which was the lowest measurement since at least 2013. While a quarter of respondents, or 25%, reported worse conditions for debt financing in July, 19% said they believed conditions had become more favorable.
“All four indexes are below 50 but rising, suggesting that the softening is less widespread than in previous quarters,” says Mark Obrinsky, NMHC's SVP of research and chief economist. “Despite some softness at the high end of the apartment market, due to construction having finally ramped up to the level needed, demand for apartments will continue to be substantial for years to come.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
