Apartment Absorption Rate and Rent Costs Declines As Completion Increase

According to the U.S. Census Bureau’s Survey of Market Absorption (SOMA) the absorption rate of unfinished, unsubsidized apartments (the market share rented out in the first 3-months following completion) fell by -5 percentage points to a reading of 51% in Q3 of 2020, down from 56% in Q3 2019. However, the number of apartments completed significantly rose, year-over-year, from 69,630 units in Q3 2019 to 85,960 units in the Q3 2020, or about a 23% increase. Although the absorption rate declined, more apartments were absorbed in the three months following completion, compared to the same period in 2019. The median asking rent for these apartments fell slightly, going from $1,676 in Q3 of 2019 to $1,650 in Q3 of 2020, or a -2% decrease. Of note, this is the second consecutive quarter with a year-over-year decline in the median asking rent price, though it is a slight improvement over the decline in the second quarter of 2020, which was a -4% drop.