April NMHC quarterly survey shows greater supply improving affordability


Apartment market conditions were uneven, according to results from the April National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions. The Market Tightness (38), Sales Volume (43) and Debt Financing (36) Indexes landed below the breakeven level of 50, while the Equity Financing Index decreased to 54.

“Apartment markets continue to send mixed signals,” said NMHC Chief Economist Mark Obrinsky. “While respondents indicated more markets are loosening than tightening, this was focused in markets that have experienced greater supply. So, the message is clear, if unsurprising: Increasing supply improves affordability.”

The Market Tightness Index increased two points to 38. This was the tenth consecutive quarter of overall declining conditions. Thirty-eight percent of respondents reported looser market conditions than three months prior, compared to only 14 percent who reported tighter conditions. Meanwhile, nearly half of respondents (47 percent) felt that conditions were no different from last quarter.

The Sales Volume Index increased from 40 to 43. Nearly a third of respondents (32 percent) reported lower sales volume than three months prior. Likewise, 18 percent noted higher volume, while the remaining 48 percent reported unchanged sales volume.

The Equity Financing Index decreased from 58 to 54. The index still indicated overall improving conditions for the second straight quarter. While most respondents (60 percent) reported unchanged conditions in the equity market, 17 percent thought that equity financing was more available than in the three months prior. Just nine percent of respondents believed equity financing was less available.

The Debt Financing Index declined from 38 to 36. Over a third of respondents (37 percent) reported worse conditions for debt financing compared to three months prior. Ten percent of respondents disagreed, believing that conditions for debt financing had become more favorable. And in what seemed to be a recurring theme in this quarter’s survey, close to a half of respondents (44 percent) reported unchanged conditions.

Equity capital still views apartment investment favorably. The biggest obstacle to transaction volume is the relatively restrained volume of offerings in today’s market — though tighter debt financing may also be a factor.

About the Survey

The April 2018 Quarterly Survey of Apartment Market Conditions was April 9-April 16, 2018; 130 CEOs and other senior executives of apartment-related firms nationwide responded. View the full data online.