Key Highlights:
- The national multifamily market stabilized through mid-2024. The vacancy rate improved slightly and rent growth remained steady. Apartment demand was bolstered by sustained hiring and persistent affordability barriers in the single family housing market.
- New supply remains the greatest challenge in the apartment market. However, the peak of new project deliveries appears to be approaching in many markets.
- Transaction volume increased notably compared with one year prior, in part because of two large portfolio sales. Looking ahead, recent interest rate cuts and market expectations of additional cuts should help decrease borrowing costs for prospective buyers and limit distress for existing owners.
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Additional Insights:
National operating fundamentals began to stabilize through the summer. The vacancy rate decreased slightly to 5.3% by the second quarter of 2024, nearly on par with the average of 5.1% during the last economic cycle. Vacancy trends continued to vary by region, with supply pipelines the greatest correlation factor. The vacancy rate tightened further in San Francisco, San Jose/Silicon Valley and Manhattan, areas with relatively little new supply added in recent quarters. As in the past two years, markets with the greatest supply deliveries produced higher vacancy rates. The apartment vacancy rate increased by 80 basis points or more between mid-2023 and mid-2024 in such markets as Atlanta, Austin, Orlando and Houston.
Multifamily Stabilizes as Deliveries Moderate and Volume Recovers was developed in partnership with Rosen Consulting Group.
