NEW YORK CITY—Multifamily has captured a greater share of newCMBS issuance this year, with conduits backed byapartment properties accounting for 17% of originations in thefirst quarter, compared to 7% the year prior. However, a reportfrom Standard & Poor's raises the question ofwhether new issuance has come late to the party, although thesector's fundamentals are still strong.

“Although we believe the outlook for property fundamentals overthe next few years is still good, supply growth and increased homesales activity have started to slow things down in the multifamilysector,” write senior credit analyst Larry Kay and his co-authorsat S&P. Citing the results from the most recentNational Multifamily Housing Council quarterlysurvey of senior executives in the industry, they write that“apartment market conditions have been weakening. A markettightness index below 50 indicates that marketconditions--including vacancies and rent increases--are softening,while a sales volume index below 50 signifies that property salesare slowing. Even though apartment activity is typically slow inNovember through January, the last time either of these two indicesindicated improving conditions was in July 2013.”

Further, Kay notes that although the amount of multifamily CMBSdelinquency declined once more in the first quarter, “it declinedthe least of the property types. Multifamily also had the sharpestproperty loss severity rate increase in the quarter, jumping to34.1% from 9.4%” in Q4 2013. That being said, the report notes thatlate-pays in multifamily have shown the steepest decline of anysector since peaking in 2010.