Despite headwinds throughout the industry, the Multifamily space showed surprisingly strong results in the second quarter of 2024. The sector appears to be approaching an inflection point, with indicators for demand remaining strong, while the supply pipeline has slowed down substantially. For the complete picture, read our Q2 2024 U.S. Multifamily MarketBeat Report.
- For the first time since 2021, the U.S. multifamily vacancy rate declined, dropping by 10 basis points (bps) in the second quarter.
- Absorption reached nearly 140,000 units in the second quarter, marking the fourth-highest figure since 2000, surpassed only by the first three quarters of 2021. Through the first half of 2024, absorption has nearly matched the entirety of 2023’s demand.
- The Sun Belt led with demand exceeding 100,000 units this year, representing more than 2% of the region’s inventory.
- Construction starts have plunged: Only 103,000 units have broken ground this year, down 60% from this time last year. If demand remains strong, the supply wave should be absorbed over the next 18-24 months.
- Rent growth remains sluggish but positive, at 1.7% over the last year—about half the historical average.
As illustrated by this chart, the market appears to have reached a potential inflection point. Both stabilized vacancy (the number of vacant units in buildings older than 18 months or that have reached 80% occupancy within 18 months of delivering, expressed as a percentage of total inventory) and overall vacancy rates have dipped in recent quarters, pointing to a rebound in fundamentals. As more buildings come to market and stabilize, the gap between these two divergent measures will likely narrow as the pipeline empties out.
To learn how vacancy, absorption, rents and more are performing throughout the U.S., download the full Q2 2024 U.S. Multifamily MarketBeat Report.
