The National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions for October 2023 revealed a weakening in the apartment market. The survey’s indexes for Market Tightness, Sales Volume, Equity Financing and Debt Financing all fell below the break-even level of 50.
According to NMHC’s VP of research, Caitlin Sugrue Walter, this decline can be attributed to rising interest rates and stricter lending standards which have led to a decrease in available debt financing for nine consecutive quarters. Additionally, buyers and sellers are struggling to come to an agreement on pricing resulting in six consecutive quarters of declining sales volume.
However, Walter also noted that this softness in the apartment market could lead to a decrease in shelter component inflation which may help overall inflation cool down towards the Federal Reserve’s target rate of 2%. In the long term though, there is still strong demand for multifamily housing due to demographic trends and solid market fundamentals.
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