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and Washington, DC—slowed in the first half of 2017 from a year earlier. The exception was Chicago, where net sales continued to pick up. Large purchases of high- and mid -rise apartment buildings also rose in nom major metros. Investors and lenders alike appear more cautious at this stage of the cycle. According to a recent Federal Reserve survey for the third quarter of 2017, bank loan officers on net reported weaken- ing demand for loans secured by multifamily residential structures, while also reporting more stringent lending standards—the ninth consecutive quarter of tightening. Nevertheless, the Mortgage Bankers Association reports that the vol- ume of multifamily loans outstanding (including both originations and repayment/write-offs of existing loans) hit a new high of $1.2 trillion in nominal terms in early 2017, a 9 percent increase from a year earlier and a 44 percent jump from early 2011. Federal lending sources were responsible for fully two-thirds of the net increase in debt financing over the past year. Banks and thrifts have also steadily expanded their lending, raising their share of mortgage debt outstanding from a quarter in 2011 to about a third. Despite signs that the rental market may be cresting and that inves- tors are facing greater headwinds, measures of credit risk remain low overall. only 0.15 percent of all FDIC -insured loans secured by multifamily residential properties were in noncurrent status (90 days past due or in nonaccrual status) in the second quarter of 2017, down from 0.23 percent a year earlier. According to Moody's Delinquency Tracker, the noncurrent rate for commercial mortgage- backed securities (60 days past due, in foreclosure, or REO), though higher, was still a modest 2.8 percent in August 2017, THE OUTLOOK After seven years of tightening, rental market conditions have begun to ease in many metro areas. So far, most of the slack is at the upper end of the market and in core urban areas, where most new rental units have come online. However, supply pressures may be lessen- ing in the moderately priced segment as well. While this does appear to be a turning point, the extent of any potential slowdown depends in large part on the strength of future rental demand. The most likely scenario is that renters will still account for about a third of household growth going forward, which would make for a soft landing from current market conditions. But if the downshift in renter household growth is more significant, the impact on markets would be more negative. Whatever the short-term outlook, there will be ongoing need for lower-cost rental housing. Now that the high end is saturated, devel- opers may turn their attention to the middle -market segments. But given the challenges of supplying lower-cost units amid high and rising development costs, government at all levels will have to find new ways to facilitate preservation and expansion of the affordable stock. The housing industry must also play its part in fostering inno- vation to meet the nation's rental affordability challenges. 25