The U.S. Census Bureau’s Survey of Market Absorption (SOMA) shows that the absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) inched up to 60 percent in the second quarter of 2020 (from 55 percent in the second quarter of 2019) (Figure 1). Meanwhile, the number of apartments completed fell slightly, from 68,140 units in the second quarter of 2019 to 64,360 units in the second quarter of 2020 (about a 6 percent drop).
Although apartment absorption remained fairly steady, the median asking rent price of these apartments fell by 6 percent to $1,543 in the second quarter of 2020 (from $1,640 in the second quarter of 2019). This is the first year-over-year decline in the median asking rent price since the first quarter of 2019. The coronavirus pandemic has pushed millions into unemployment, and has discouraged renter mobility and the formation of new renter households, which has put downward pressure on rents for new apartments.
The SOMA also provides data on condominium completions and absorption (Figure 2). Condominium absorption increased to 61 percent in the second quarter of 2020 (from 54 percent in the second quarter of 2019). It is also important to note that condominium completions dropped significantly, going from 7,285 in the second quarter of 2019 to 2,497 in the second quarter of 2020, the lowest second quarter completions total since 2014.
Meanwhile, the median asking sales price of condominiums jumped significantly to $1,064,000 in the second quarter of 2020, 65 percent higher than the asking sales price of $646,700 in the second quarter of 2019. The elevated median sales price is likely a function of the low number of condominiums coming online in the second quarter. It is also important to note that the for-sale housing market has been particularly strong during the pandemic, with the Case-Shiller home price index growing at a seasonally adjusted annual rate of 18.3 percent through September, the fastest since March 2013.