WASHINGTON, D.C. — All indices in the National Multifamily Housing Council’s (NMHC) October 2024 Quarterly Survey of Apartment Market Conditions showed more favorable conditions this quarter, except for the Market Tightness (37) index. The survey’s Sales Volume (67), Equity Financing (63) and Debt Financing (77) indices all came in above the breakeven level of 50.
“The 10-year Treasury yield fell 28 basis points over the past three months as the Federal Reserve enacted its first 50-basis-point cut to short-term rates,” says Chris Bruen, NMHC economist and senior director of research. “Survey respondents, in turn, reported more favorable conditions for debt financing for the third straight quarter and more available equity financing for the first time in two-and-a-half years.”
However, elevated levels of multifamily deliveries resulted in the ninth consecutive quarter of “looser” conditions, especially in the South and Sun Belt markets, says Bruen.
“Still, strong demand for apartments has meant that much of this new supply is getting absorbed,” he states.
While close to half of respondents (46 percent) thought market conditions were unchanged relative to three months ago, 40 percent indicated markets have become looser, up from 27 percent in July. Fifteen percent of respondents reported tighter markets than three months ago.
Forty-six percent of respondents reported sales volume to be unchanged from three months ago, while 43 percent reported higher sales volume this quarter, increasing from 21 percent in April and 32 percent in July. Ten percent indicated volume was lower.
The October survey reported that the Equity Financing Index (i.e. more available equity financing) exceeded the breakeven level for the first time since the January 2022 survey. Thirty-two percent of respondents reported more available equity financing, up from 13 percent in July. Six percent thought equity was less available, and roughly half of participants (53 percent) thought equity availability remained unchanged from three months ago.
Up from 37 percent in July, the majority (62 percent) of participants this quarter indicated now is a better time to borrow than three months ago, while 8 percent reported borrowing conditions were worse than three months ago. A quarter of participants reported unchanged debt financing conditions, down from 44 percent last quarter.
Washington, D.C.-based NMHC says this latest round of the survey firmly reflects both increasing sales volume and more favorable financing conditions. The survey was conducted from Sept. 30 to Oct. 15. NMHC collected responses from 103 CEOs and other senior executives of apartment-related firms nationwide.
— Kristin Harlow