Data from the U.S. Census Bureau’s Survey of Market Absorption (SOMA) show that the absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) fell to 45 percent in the first quarter of 2020 (from 53 percent in the first quarter of 2019) (Figure 1).This is the lowest absorption rate on record for the first quarter since at least 1986 (the series started in the 1970s, but earlier data is not accessible). Undoubtedly, the decline in the absorption rate is related to the emergence of COVID-19 in the US.
The number of apartments completed also fell, from 66,460 units in the first quarter of 2019 to 59,790 units in the first quarter of 2020. The median asking rent price for these apartments, however, was virtually unchanged at $1,587 (from $1,600 in the first quarter of 2019).
The SOMA also has data on condominium completions and their absorption (Figure 2). Like the apartment absorption rate, the condominium absorption rate fell, going from 73 percent in the first quarter of 2019 to 67 percent in the first quarter of 2020. Condominium completions were also lower at 3,060 units (compared to 4,484 units in the first quarter of 2019).
Meanwhile, the median asking sales price of condominiums jumped significantly to $778,800 in the first quarter of 2020, approximately 26 percent higher than the asking sales price of $616,600 in the first quarter of 2019.
In conclusion, the SOMA data show that the absorption rates for both apartments and condominiums fell for units completed in the first quarter of 2020, indicating that people refrained from leasing and buying as the coronavirus pandemic hit. The next SOMA release will show if the impact was sustained into the summer.