Multifamily Market Absorption at the Start of 2015

Apartment absorptions continued to be strong at the start of 2015, as multifamily production levels remain elevated.

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 209,100 residences for 2014, a 57% increase from the prior year.

Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for fourth quarter completions (rented during the first quarter of 2015) were effectively unchanged at 58% from 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.

SOMA_apt_1q15abs

In contrast, condo and co-op completions remain at historically low levels, with 2,600 for-sale multifamily homes (in 5+ unit properties) completed during the final quarter of 2014. The non-seasonally adjusted 3-month absorption rate for for-sale multifamily for condos completed during the final quarter of 2014 and sold during the first quarter of 2015 improved to 83%, higher than the 74% reported a year earlier and an uptick over the weak quarter of sales at the end of 2014.

SOMA_condo_1q15abs

The SOMA data also reveal that for properties with five or more units, approximately 6,400 Low-Income Housing Tax Credit or other federally subsidized units were completed during the last quarter of 2014. This is down from the 13,500 such units completed a year earlier. Over the last four quarters, 25,800 LIHTC and other affordable housing units were completed (almost 10% of the total).

SOMA_completions

 



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