Absorption rates for new rental and for-sale multifamily units continued to improve during the third quarter of 2013, consistent with the positive trends that been in place since the end of the Great Recession.
According to data from the Survey of Market Absorption of Apartments (SOMA), completions of privately financed, unsubsidized, unfurnished rental apartments were up strongly for the four quarter period ending with the second quarter of 2013. A total of 115,800 such apartments were completed for those four quarters, compared to 82,900 a year earlier.
Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for second quarter completions (rented during the third quarter) increased to 71% from 62% a quarter prior. Absorption rates for rental apartments have been generally rising since late 2008 as rental demand increased as a result of the housing downturn.
In contrast, condo and co-op completions remain at historically low levels, but rose slightly to 3,100 completions, the highest level since the days of the federal homebuyer tax credit. While construction remains at low levels, the 3-month absorption rate for for-sale multifamily has improved significantly, reaching 84% for second completions.
The SOMA data also reveal that approximately 7,000 Low-Income Housing Tax Credit or other federally subsidized units were completed in the second quarter of 2013. This is down slightly from the 8,100 affordable units estimated completed during the first quarter. The affordable share, LIHTC and other subsidized units, of multifamily completions was 16% for the second quarter.