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As Single-Family Buyers Back Off, Apartment Absorption Rate Surges to 25-Year High

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As Single-Family Buyers Back Off, Apartment Absorption Rate Surges to 25-Year High

The multifamily market saw substantial growth in the second quarter of 2022 as would-be buyers put off their home purchasing plans and opted to rent instead

December 2, 2022
Exterior of gray multifamily apartment building with balconies
Image: Stock.adobe.com

Bolstered by high demand from would-be single-family buyers, the multifamily market posted strong gains throughout the second quarter of 2022. As low single-family housing supply and persistently high prices in the for-sale market encouraged would-be buyers to instead turn to multifamily rentals, the absorption rate of unfurnished, unsubsidized apartments rose by 15 percentage points to 77% in Q2 2022, NAHB Eye on Housing reports.

The number of multifamily completions also rose from 52,170 in the first quarter of the year to 77,110 in Q2, though completions were down 8.6% year-over-year.

The absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) rose by 15 percentage points to 77% in the second quarter of 2022. This is the highest absorption rate since the second quarter of 1997 (80%).

The median asking rent for apartments increased from $1,683 in the second quarter of 2021 to $1,745 in the second quarter of 2022, a 4% increase over the year. This is the sixth consecutive quarter with a year-over-year increase in the median asking rent price.

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