US Multifamily Recovery Gained Momentum in Q4; Expectations High for Q1

On Friday, CBRE announced that positive net absorption—the change in the number of occupied units—in the US multifamily market reached 183,600 units in Q4. This marked the strongest fourth quarter performance on record and 12 times more than the pre-pandemic fourth-quarter average. It also was the third consecutive quarter where demand surpassed new completions.

CBRE found that all 69 markets it tracks saw positive net absorption in Q4, with New York leading the way with 18,600 units. Houston and Dallas followed with 10,400 and 8,800 units, respectively. In addition, 64 markets saw net absorption exceed new supply, up from 50 in Q3 and 45 in Q2.

The overall multifamily vacancy rate decreased to 4.9% in Q4, below its long-term average of 5%. Rates also declined in 63 markets, up from 56 markets in Q3.

Average monthly rents saw a bump, increasing 0.5% year-over-year to $2,176. According to CBRE, with construction completions slowing and robust absorption, rent growth is expected to accelerate in the coming months.

The Midwest and Northeast continued to experience strong year-over-year rent growth at 2.8% and 2.3%, respectively, followed by the Pacific region at 0.4%. CBRE noted that rents decreased in the Southeast, South Central, and Mountain regions in Q4.