Apartment Absorption Rates at the Start of 2014

June 9, 2014

Absorption rates for new rental and for-sale multifamily homes were roughly unchanged at the start of 2014, which is consistent with ongoing strong demand for multifamily construction.

According to NAHB analysis of data from the Census Bureau and Department of Housing and Urban Development Survey of Market Absorption of Apartments (SOMA), completions of privately financed, unsubsidized, unfurnished rental apartments in buildings with five or more units were up during 2013. A total of 132,600 such apartments were completed for these four quarters, compared to 104,500 a year earlier.

Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for fourth quarter completions (rented during the first quarter of 2014) were effectively unchanged at 60% compared to 58% a year earlier. Absorption rates for rental apartments rose coming out of the recession but established a more stable range since 2011.

4q_1q14 absorp_apts

In contrast, condo and co-op completions remain at historically low levels, with 2,100 for-sale multifamily homes completed during the fourth quarter of 2013. The 3-month absorption rate for for-sale multifamily dipped for condos completed at the end of 2013 and sold during the first quarter of 2014, falling to 71%.

4q_1q14 absorp_condo

The SOMA data also reveal that for properties with five or more units approximately 15,000 Low-Income Housing Tax Credit or other federally subsidized units were completed in the fourth quarter of 2013. This is up from the 8,500 such units completed a year prior. The affordable share, LIHTC and other subsidized units, of multifamily completions was 30% for fourth quarter completions.

4q13 MF completions  by type


Apartment Absorption Rates Remain High

March 12, 2014

Absorption rates for new rental and for-sale multifamily homes remained near post-recession highs in the fourth quarter of 2013.

According to data from the Survey of Market Absorption of Apartments (SOMA), completions of privately financed, unsubsidized, unfurnished rental apartments in buildings with five or more units were up strongly for the four quarter period ending with the third quarter of 2013. A total of 129,200 such apartments were completed for those four quarters, compared to 88,700 a year earlier.

Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for third quarter completions (rented during the fourth quarter) remained steady at 66% compared to 65% a year earlier. Absorption rates for rental apartments have been generally rising since late 2008 as rental demand increased as a result of the housing downturn.

Apts_4q rentals

In contrast, condo and co-op completions remain at historically low levels, with 1,700 for-sale multifamily homes completed during the third quarter. While construction remains at low levels, the 3-month absorption rate for for-sale multifamily has improved significantly, reaching 90% for third quarter completions.

Condos_4q sales

The SOMA data also reveal that for properties with five or more units approximately 10,900 Low-Income Housing Tax Credit or other federally subsidized units were completed in the third quarter of 2013. This is down slightly from the 11,600 affordable units estimated completed during same quarter in 2012. The affordable share, LIHTC and other subsidized units, of multifamily completions was 19% for the third quarter.

3q completions by type


Apartment Absorption Rates Rise

December 19, 2013

Absorption rates for new rental and for-sale multifamily units continued to improve during the third quarter of 2013, consistent with the positive trends that been in place since the end of the Great Recession.

According to data from the Survey of Market Absorption of Apartments (SOMA), completions of privately financed, unsubsidized, unfurnished rental apartments were up strongly for the four quarter period ending with the second quarter of 2013. A total of 115,800 such apartments were completed for those four quarters, compared to 82,900 a year earlier.

Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for second quarter completions (rented during the third quarter) increased to 71% from 62% a quarter prior. Absorption rates for rental apartments have been generally rising since late 2008 as rental demand increased as a result of the housing downturn.

apt absorptions_2q13

In contrast, condo and co-op completions remain at historically low levels, but rose slightly to 3,100 completions, the highest level since the days of the federal homebuyer tax credit. While construction remains at low levels, the 3-month absorption rate for for-sale multifamily has improved significantly, reaching 84% for second completions.

condo absorptions_2q13

The SOMA data also reveal that approximately 7,000 Low-Income Housing Tax Credit or other federally subsidized units were completed in the second quarter of 2013. This is down slightly from the 8,100 affordable units estimated completed during the first quarter. The affordable share, LIHTC and other subsidized units, of multifamily completions was 16% for the second quarter.

apt completions_2q13