Apartment Absorption Increased in Q4 of 2021, but Completions of New Units Declined

According to data from the U.S. Census Bureau’s Survey of Market Absorption of Apartments (SOMA), continued improvement in the multifamily sector in Q4 of 2021 was the direct result of strong demand and low vacancy rates. On the other hand, the decline in the number of apartment and condominium completions in Q4 of 2021 seemed to reflect the ongoing challenges within the supply chain.

According to SOMA data, the absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) surged by 14 percentage points to 66% in Q4 of 2021 (up 52% from Q4 of 2020). However, the number of apartments completed was down during this same period, from 75,670 units in Q4 of 2020 to 69,970 units in Q4 of 2021, about a -7.8% reduction in completions.

The median asking rent for these apartments increased from $1,613 in Q4 of 2020 to $1,800 in Q4 of 2021, which represents a 12% gain year-over-year. This marks the fourth consecutive quarter with a year-over-year increase in the median asking rent price.

The SOMA data also data on condominium completions and absorption. Condominium absorption increased to 77% in Q4 of 2021 (up from 70% in Q4 of 2020). Meanwhile, condominium completions fell from 6,828 in Q4 of 2020 to 5,520 in Q4 of 2021.