Absorption Data Indicate Multifamily Market Leveling Off

The US Census Bureau recently released data on multifamily completions and absorption rates from the second quarter of 2016. Completions of privately financed, unfurnished, unsubsidized apartments in buildings with five or more units totaled to 62,600, which is approximately 5,000 fewer than completions in the second quarter of 2015 (Figure 1).

Examining Figure 1 further indicates a leveling off of multifamily completions from its peak in the third quarter of 2015 (completions in that quarter reached 84,000). Similarly multifamily starts, which also serves as a measure of multifamily market activity, has showed signs of a slight slowdown in 2016, compared to the prior year.

Census also reports on the absorption rate, or the share of these units that were rented within three months after the completion date. For apartments completed in the second quarter of 2016, the absorption rate stood at 58 percent, down 8 percent from the same quarter last year (66 percent).

Condominium (and cooperative) completions in the second quarter of 2016 totaled to 2,800, essentially unchanged from the second quarter of 2015 (2,700 completions). However, the condominium absorption rate picked up slightly, going from 63 percent in the second quarter of 2015 to 66 percent in the second quarter of 2016 (Figure 2).

Figure 3 displays subsidized and tax credit unit completions as a share of total apartment completions. In the second quarter of 2016, subsidized or tax credit unit completions represented 7 percent (4,700 units) of total apartment completions. Starting in 2010, the share of these units completed surged, but started to decrease significantly starting in 2014.

 



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