Rents and transactions continue to fall


Apartment market conditions weakened in the National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions for January 2023, as the Market Tightness (14), Sales Volume (10), Equity Financing (20), and Debt Financing (25) indexes all came in well below the breakeven level (50).

“The Fed’s interest rate hikes are having their intended effect on prices, as monthly apartment rents decreased nationwide,” noted NMHC’s Chief Economist, Mark Obrinsky. “Rents are still higher than year-ago levels, but this reflects past, not current rent inflation.”

“These rate hikes have also translated to a higher cost of debt financing, causing buyers to seek a higher rate of return. With sellers unwilling to budge much on pricing, apartment transaction volume has largely dried up.”

More context
  • The Market Tightness Index came in at 14 this quarter—well below the breakeven level (50)—indicating looser market conditions for the second consecutive quarter. Over three-quarters of respondents (78 percent) reported markets to be looser than three months ago, while only 5 percent thought markets have become tighter. Another 16 percent of respondents thought that market conditions were unchanged over the past three months.
  • The Sales Volume Index came in at 10—considerably below the breakeven level (50). Similar to last quarter, the vast majority of respondents (82 percent) reported lower sales volume, with only 2 percent reporting sales volume to be higher than three months ago. Thirteen percent of respondents reported no change in volume.
  • The Equity Financing Index reading of 20 marked the fourth consecutive quarter in which equity financing became less available. Nearly two-thirds (63 percent) of respondents reported equity financing to be less available than three months ago, while 27 percent of respondents believed availability to be unchanged. Only 2 percent of respondents reported an increase in the availability of equity financing.
  • The Debt Financing Index reading of 25 indicated the sixth straight quarter in which debt financing became less available. Sixty percent of respondents reported that conditions have worsened for debt financing, while a quarter (25 percent) thought that conditions were unchanged Unlike in October, some respondents (9 percent) reported that now is a better time to borrow than three months ago.
About the survey

The January 2023 Quarterly Survey of Apartment Market Conditions was conducted from January 5-12, 2023. A total of 234 CEOs and other senior executives of apartment-related firms nationwide responded.

Find more key findings from the NMHC Quarterly Survey of Apartment Market Conditions.