A demand for new apartments, a trend first significantly noticed during the months after the spring 2020 Covid 19 outbreak, has remained on pace, according to a new survey.
The U.S. Census Bureau, in its Survey of Market Absorption of New Multifamily Units, is reporting that the absorption rate for newly completed rental units increased to 55% during the second quarter of this year.
That 55% is a notable improvement over the previous quarter’s 50%.
Despite those strong numbers, the absorption rate remains below the historic 75% rate hit during the third quarter of 2021 when the market was still being impacted by the pandemic.
The survey focuses on buildings with five or more residential units, with those units having been completed in a three-month period.
In a press release, the National Association of Home Builders noted that the construction of buildings with two to four units has generally been lagging since the Great Recession. “However, there was a noticeable uptick for this type of housing construction in the most recent data.”
By way of example, the NAHB points out that as of April of this year there were 6,000 projects with two to four residential units under construction nationally, double the pace of construction from a year prior.”
According to the Census survey, the absorption rate during the same period for condominiums and cooperative units saw a 66% absorption rate. While that figure was much stronger than the residential unit sector, it was still significantly below the 80% rate recorded the previous quarter.
The apartment absorption rate averaged out to 70% between early 2021 and early 2022. The rate saw a swift decline to 57% between late 2022 and the fall of 2023.
Exactly where the industry is heading in 2025 is not entirely clear, says the publication Forbes. Noting that such challenges as high interest rates and an oversupply of units have begun to subside, the publication adds that new opportunities for investors are emerging, especially in “high-demand regions.”
December 5, 2024
By Garry Boulard
Photo courtesy of Common Stock and Pixels
