Economy Watch: Apartment Market Still Robust
- Apr 19, 2013
The National Multi-Housing Council reported on Thursday in its April Quarterly Survey of Apartment Market Conditions that the U.S. apartment market is in dandy shape across the board. All four indexes—Market Tightness (54), Sales Volume (55), Equity Financing (56) and Debt Financing (59)—came in above 50, which indicates improving conditions. That compares with a downward blip last month, when Market Tightness and Sales Volume dropped below 50 for the first time since 2010.
Curiously enough, even though multifamily is the darling among CRE development and investment sales, most respondents to the NMHC survey still report tight lending standards. Only one in 10 reported construction financing as “available for all types of apartments in all markets.” Also, only one quarter thought acquisition financing was available for all properties in all markets.
“The apartment industry is operating on cruise control, as the expansion continues unabated,” Mark Obrinsky, NMHC’s chief economist, noted in a statement. “While concern about overbuilding has begun to crop up, demand for apartment residences remains strong. New construction may have finally recovered fully, but most units under construction won’t be delivered until 2014 or later.”
Leading indicators drop
The Conference Board said on Thursday that its Leading Economic Index for the U.S. dropped 0.1 percent in March to 94.7 (the increasingly hard to remember 2004 = 100), following a 0.5 percent increase in February, and a 0.5 percent increase in January. The index includes 10 components, such as manufacturing hours and orders, building permits, stock prices and consumer expectations.
The Leading Economic Index still points to a continuing but slow growth environment, according to the organization. Relative weakness in consumer expectations and housing permits was offset by the positive interest rate spread and other financial components. The Conference Board’s Coincident Economic Index, which is a measure of current conditions, dropped 0.1 percent in March to 105.2 (2004 = 100), following a 0.5 percent increase in February, but a 1.1 percent decline in January. Its overall downward track was mainly due to a large decline in personal income.
“Data for March reflect an economy that has lost some steam,” Ken Goldstein, an economist at the Conference Board, noted in a press statement. “In addition to headwinds from government spending cuts, the private sector economy may struggle to maintain its momentum. The biggest challenge remains weak demand, due to nervous consumer sentiment and slow income growth.”
Unemployment claims up slightly
The Bureau of Labor Statistics reported on Thursday that for the week ending April 13, initial unemployment claims were 352,000, an increase of 4,000 from the previous week’s revised figure of 348,000. The less volatile four-week moving average was 361,250, an increase of 2,750 from the previous week’s figure.
Wall Street had another down day on Thursday, with the Dow Jones Industrial Average losing 81.45 points, or 0.56 percent. The S&P 500 was down 0.67 percent and the Nasdaq declined 1.2 percent.