Apartment Absorption Increased while Completions Fell

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Data from the Survey of Market Absorption of Apartments (SOMA), produced by the Census Bureau, suggest continued improvement for the multifamily sector in the fourth quarter of 2021 due to strong demand and low vacancy rates. However, the decline in the number of apartment and condominium completions in the fourth quarter of 2021 may reflect the ongoing supply chain challenges.

The absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) surged by 14 percentage points to 66 percent in the fourth quarter of 2021 (from 52 percent in the fourth quarter of 2020) (Figure 1). Meanwhile, the number of apartments completed was down during this period, from 75,670 units in the fourth quarter of 2020 to 69,970 units in the fourth quarter of 2021 (about a 7.5 percent decrease).

The median asking rent for these apartments increased from $1,613 in the fourth quarter of 2020 to $1,800 in the fourth quarter of 2021 (a 12 percent gain). This is the fourth consecutive quarter with a year-over-year increase in the median asking rent price.

The SOMA also provides data on condominium completions and absorption (Figure 2).  Condominium absorption increased to 77 percent in the fourth quarter of 2021 (from 70 percent in the fourth quarter of 2020).  Meanwhile, condominium completions fell from 6,828 in the fourth quarter of 2020 to 5,520 in the fourth quarter of 2021.

The median asking sales price of condominiums in the fourth quarter of 2021, however, has been withheld as data did not meet publication standards.



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