The rental apartment market continued to be strong during the second quarter 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 210,200 residences for the four quarter period ending with the first quarter of 2015, a 40% increase from the prior four quarters.
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 2015) were effectively unchanged from a year prior at 61%. 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 1,300 for-sale multifamily homes (in 5+ unit properties) completed during the first quarter of 2015. The non-seasonally adjusted 3-month absorption rate for for-sale multifamily for condos completed during the first quarter and sold during the second quarter of 2015 held strong at 74%.
The SOMA data also reveal that for properties with five or more units, approximately 5,300 Low-Income Housing Tax Credit or other federally subsidized units were completed during the first quarter of 2015. Over the last four quarters, 27,300 LIHTC and other affordable housing units were completed (approximately 10% of total apartment completions).
With 25% or more of largest market demographic, first time buyers, missing from the existing homes market, apartment construction will be strong. Unless someone begins to deal with the problem, the nation will become a nation of renters.