According to the most recent Quarterly Survey of Apartment Market Conditions released by the National Multifamily Housing Council (NMHC) on Tuesday, there has been a decline in apartment market conditions. All four indices – Market Tightness (40), Sales Volume (41), Equity Financing (48) and Debt Financing (32) – were below 50, indicating less favorable conditions this quarter.
Chris Bruen, NMHC’s economist and senior director of research, noted that census data revealed a record number of apartments delivered in 2024 compared to any other year since 1974. This increase in supply has led to lower rent growth and occupancy rates, particularly in sunbelt markets.
In addition to this trend, Federal Reserve officials have projected that short-term interest rates will remain higher for longer as they work towards controlling inflation. As a result, the median projection for rate cuts in 2025 is now only two. The rise of the 10-Year Treasury yield between October and January also contributed to higher costs for both debt and equity capital within the apartment market sector.
Overall, these factors have resulted in declining conditions within the apartment market as shown by NMHC’s survey results.