Absorption rates for new rental and for-sale multifamily homes were roughly unchanged at the start of 2014, which is consistent with ongoing strong demand for multifamily construction.
According to NAHB analysis of 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 were up during 2013. A total of 132,600 such apartments were completed for these four quarters, compared to 104,500 a year earlier.
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 2014) were effectively unchanged at 60% compared to 58% a year earlier. Absorption rates for rental apartments rose coming out of the recession but established a more stable range since 2011.
In contrast, condo and co-op completions remain at historically low levels, with 2,100 for-sale multifamily homes completed during the fourth quarter of 2013. The 3-month absorption rate for for-sale multifamily dipped for condos completed at the end of 2013 and sold during the first quarter of 2014, falling to 71%.
The SOMA data also reveal that for properties with five or more units approximately 15,000 Low-Income Housing Tax Credit or other federally subsidized units were completed in the fourth quarter of 2013. This is up from the 8,500 such units completed a year prior. The affordable share, LIHTC and other subsidized units, of multifamily completions was 30% for fourth quarter completions.