Chart: Demand for Multifamily Remains Very Strong
Data from the Census Bureau’s latest Survey of Market Absorptions of New Multifamily Units (SOMA) indicates that the multifamily market continues to have high demand with apartment completions reaching their highest level since the third quarter of 2021. The absorption rate of new condominiums reached 82.0%, the best rate since the third quarter of 2013. With low single-family housing supply and increased unaffordability in the for-sale market, many would-be homebuyers have turned to or remained in the multifamily market.
The absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) fell by 11 percentage points to 62.0% in the third quarter of 2022. The number of completions was up from the second quarter of 2022, from 76,970 to 85,190, while completions were down 1.4% from one year ago.
The median asking rent for apartments increased from $1,722 in the third quarter of 2021 to $1,805 in the third quarter of 2022, a 4.8% increase over the year. This is the seventh consecutive quarter with a year-over-year increase in the median asking rent price.
The condominium absorption rate (the share purchased in the first three months following completion) increased from the second quarter of 2022 by 9 percentage points to 82.0% while condominium completions increased by 66.2% on a year-over-year basis from 2,775 in the third quarter of 2021 to 4,611 in the third quarter of 2022.
The median asking sales price of condominiums rose to $579,900 in the third quarter of 2022, 4.4% higher than the median asking sales price of $555,600 in the third quarter of 2021.