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The Freddie Mac Multifamily Apartment Investment Market Index (AIMI) rose by 5.1% in the second quarter. This was the second consecutive quarterly increase of AIMI nationwide and in all 25 markets.

On a year-over-year basis, the index saw a decrease nationwide and in 23 markets. However, the year-over-year drop of -2.6% was significantly smaller than that of the prior quarter.

“This quarter’s results show that AIMI is rebounding,” said Sara Hoffmann, director of multifamily research at Freddie Mac. “The index experienced a sharp annual decline in each of the prior four quarters, but a pullback in property prices and moderating mortgage rates are helping AIMI regain its footing. Over the past quarter, the index increased due to the confluence of net operating income (NOI) growth, property price depreciation, and lower mortgage rates relative to recent trends."

The AIMI combines multifamily rental income growth, property price growth, and mortgage rates to provide a single index measuring market investment conditions. An increase from one quarter to the next implies an increasingly favorable environment for investment opportunities, while a decline suggests attractive investment opportunities are becoming more difficult to find compared with the prior quarter.

According to Freddie Mac, the quarter’s national growth rate is the highest since the third quarter of 2019. Quarter over quarter, NOI was up in the nation and most markets, with no markets deeply negative. Phoenix was the lowest performer at -0.8%. Property prices also dropped in the nation and all but two markets—Miami and Nashville, Tennessee—which saw minimal growth of 0.1% and 0.5%, respectively. In addition, mortgage rates dropped by 20 basis points, the largest quarterly bump seen since the first quarter of 2020.

Year over year, NOI growth was mixed. It saw a national growth rate of 1.8% but a decline in nine markets. Property prices decreased for all markets, contracting nationally by 10.1%, the second annual decline since the second quarter of 2010. In addition, mortgage rates rose by 131 basis points, which is high for historical standards but lower than the prior quarter’s 246-basis-point annual increase.