Absorption rates for new rental and for-sale multifamily homes remained high during the second quarter of 2014, consistent with the ongoing expansion of the multifamily sector.
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 totaled 150,080 residences for the four quarters ending with the first quarter of 2014, a 33% increase from the prior four quarter total.
Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for first quarter completions (rented during the second quarter of 2014) held steady at 62%, the same percentage reported a year earlier. Absorption rates for rental apartments rose coming out of the recession but have established a more stable range since 2011.
In contrast, condo and co-op completions remain at historically low levels, with 1,800 for-sale multifamily homes completed during the first quarter of 2014. The 3-month absorption rate for for-sale multifamily for condos completed at the start of 2014 and sold during the second quarter of 2014 was 80%, slightly lower than the 82% reported a year prior.
The SOMA data also reveal that for properties with five or more units approximately 4,900 Low-Income Housing Tax Credit or other federally subsidized units were completed during the first quarter of 2014. This is down from the 7,900 such units completed a year earlier. Over the last four quarters, 35,600 LIHTC and other affordable housing units were completed (18% of the total).