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Interest rate hikes continue to impact the multifamily industry, according to the National Multifamily Housing Council’s quarterly survey of apartment market conditions for January.

Apartment market conditions weakened, with the four indices remaining well below the break-even level of 50.“The Fed’s interest rate hikes are having their intended effect on prices, as monthly apartment rents decreased nationwide,” noted NMHC chief economist Mark Obrinsky. “Rents are still higher than year-ago levels, but this reflects past, not current, rent inflation.”

Obrinsky said the rate hikes also are resulting in the higher cost of debt financing, which is causing buyers to seek a higher rate of return. “With sellers unwilling to budge much on pricing, apartment transaction volume has largely dried up,” he added.

Findings from the survey, which was conducted between Jan. 5 and 12 with 234 CEOs and other senior executives of apartment-related firms nationwide, include:

The Market Tightness Index came in at 14, indicating looser market conditions for the second consecutive quarter. The majority of respondents, 78%, reported that market conditions were looser than three months ago, while only 5% cited tighter conditions. The remaining 16% said they thought conditions were unchanged.

The Sales Volume Index bumped up slightly to 10. The majority of respondents, 82%, reported lower sales volume, while only 2% said volume was higher than three months ago; 13% reported no change.

The Equity Financing Index at 20 indicated that equity financing was less available for the fourth consecutive quarter. Nearly two-thirds of respondents, 63%, reported that equity financing was less available, while only 2% said it was more available; 27% said availability was unchanged.

The Debt Financing index came in at 25—the sixth consecutive quarter for debt financing to be less available. Sixty percent of respondents indicated that now is a worse time to borrow than it was three months ago, while 9% respondents felt conditions improved; 25% reported unchanged conditions.