NMHC Survey Finds Strengthening U.S. Apartment Market

According to the National Multi Housing Council's latest survey of the U.S. apartment market executives, the sales volume of apartment properties is up

Dees Stribling, Contributing Editor

Washington, DC–According to the National Multi Housing Council’s latest survey of the U.S. apartment market executives, the sales volume of apartment properties is up; debt and equity are more available to the industry; and markets are tighter. For the first time since October 2005, all four survey indexes recorded better market conditions than three months ago.

The survey was conducted in late April and early May, with 61 CEOs and other senior executives of apartment-related firms nationwide who serve on NMHC’s board of directors or advisory committee responding. For all four indexes, figures above 50 indicate improving market conditions.

The survey’s Sales Volume Index increased to a record-setting 72 from 56. Forty-eight percent of respondents indicated sales volume was higher, the highest positive response ever reported. It represents a near-complete reversal from a year ago, when 43 percent said it was lower.

“Since sales volume three months ago was at a very low level, the rise in the NMHC Sales Volume Index doesn’t indicate a large increase in transaction volume, but rather widespread signs of some improvement,” Mark Obrinsky, chief economist at NMHC, tells MHN. “This dovetails with other evidence indicating that the ‘logjam’ is beginning to break up and that apartment property sales are beginning to pick up.”

The survey’s Market Tightness Index, which measures changes in occupancy rates and/or rents, rose sharply from 38 to 81, the highest figure in nearly four years. Fully 64 percent of respondents said markets were tighter–meaning lower vacancies and/or higher rents–while only 2 percent reported looser markets.

The Equity Financing Index increased from 66 to a record 71, indicating that equity financing is more available. Nearly half of respondents indicated that equity financing was more available, while a scant 3 percent thought equity financing was less available.

The Debt Financing Index also increased, from 49 to 58, meaning borrowing conditions have improved. Eighteen percent of respondents said conditions for multifamily borrowing were better this quarter; nearly 80 percent indicated that borrowing conditions were unchanged. Only 2 percent said conditions were worse.

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