Apartment market conditions continued to see improvement, according to the National Multifamily Housing Council’s (NMHC’s) Quarterly Survey of Apartment Market Conditions for July. All four indexes—Market Tightness, Sales Volume, Equity Financing, and Debt Financing—came in above the breakeven level of 50 for the first time since October 2015.
“We are witnessing strong, broad-based demand for apartments as the U.S. economy continues to recover,” said NMHC chief economist Mark Obrinsky. “Many U.S. gateway metros, which were among those hardest hit during the coronavirus pandemic, have now seen their occupancy rates return to near pre-pandemic levels. Meanwhile, rent growth remains particularly strong in a number of Sun Belt and Mountain markets.”
The Market Tightness Index increased from 81 to 96—the highest index number on record. “Nearly all respondents, 92%, this quarter observed tighter conditions in their apartment markets, signaling that the worst of the pandemic could be behind us,” said Obrinsky. Only 1% reported looser conditions than three months prior, and 7% reported no changes.
“Apartment sales volume is strong as well, bolstered by continued low interest rates and strong availability of equity financing,” added Obrinsky. The Sales Volume Index increased from 77 to 79. More than half of the respondents, 60%, cited higher sales volume than in the three months prior, while 31% reported unchanged volume. Only 3% indicated lower sales volume.
The Equity Financing Index increased from 68 to 69, with 41% of respondents reporting equity to be more available than in the three months prior and 41% reporting unchanged conditions. Only 3% indicated they were finding equity financing to be less available.
The Debt Financing Index jumped from 44 to 71, coming above the breakeven level for the first time in three quarters. Almost half, 45%, of respondents reported better debt financing conditions than in the three months prior and 39% reported unchanged conditions. Only 3% said conditions had worsened in the debt market.
