Absorption completions continued to rise during the middle of 2014, with absorption rates for both for-sale and for-rent apartments remaining high during the third quarter.
According to NAHB analysis of the most recent data from the Census Bureau and Department of Housing and Urban Development Survey of Market Absorption of Apartments (SOMA), completions of privately financed, unsubsidized, unfurnished rental apartments in buildings with five or more units totaled 171,500 residences for the four quarters ending with the second quarter of 2014, a 47% increase from the prior four quarter total.
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 of 2014) increased slightly to 67%, effectively the same rate as a year earlier. Absorption rates for rental apartments rose coming out of the recession but have established a more stable range since 2011, a period during which completions have increased substantially.
In contrast, condo and co-op completions remain at historically low levels, with 1,500 for-sale multifamily homes completed during the second quarter of 2014. The 3-month absorption rate for for-sale multifamily for condos completed during the second quarter of 2014 and sold during the third quarter was 77%, off the 84% rate reported a year prior.
The SOMA data also reveal that for properties with five or more units approximately 3,700 Low-Income Housing Tax Credit or other federally subsidized units were completed during the second quarter of 2014. This is down from the 6,700 such units completed a year earlier. Over the last four quarters, 32,800 LIHTC and other affordable housing units were completed (15% of the total).