The rental apartment market continued to be strong during the third quarter of 2015, as multifamily production expanded.
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 298,500 residences for the four quarter period ending with the third quarter of 2015, a 25% increase from a year prior.
Non-seasonally adjusted three-month absorption rates (units rented after construction of the property is complete) for third quarter completions (rented during the fourth quarter of 2015) were effectively unchanged from a year prior at 63%. Absorption rates for rental apartments rose coming out of the recession but have established an approximate range around 60% since 2011, a period during which completions have increased substantially.
In contrast, condo and co-op completions remain near historically low levels, with 3,800 for-sale multifamily homes (in 5+ unit properties) completed during the third quarter of 2015. The non-seasonally adjusted 3-month absorption rate for for-sale multifamily (for condos completed during the third quarter and sold during the final quarter of 2015) declined to 52% as production posted a small increase.
The SOMA data also reveal that for properties with five or more units, approximately 7,600 Low-Income Housing Tax Credit or other federally subsidized units were completed during the third quarter of 2015. Over the last four quarters, 28,500 LIHTC and other affordable housing units were completed (just under 10% of total apartment completions).