According to CBRE's latest research, the U.S. multifamily market showed signs of stabilization in the second quarter of 2023 with a rebound in absorption and modest uptick in vacancy.
The multifamily vacancy rate rose by 10 basis points (bps) quarter-over-quarter in Q2 2023 to 5.0%. This was a slower increase than the 30 bps rise in Q1 2023, and the 70 bps in Q4 2022. Notably, net absorption escalated to 70,200 units in Q2 2023--the highest since Q1 2022--indicating a recovery in renter demand.
"Despite a heavy supply pipeline, we are seeing renter demand remain solid as vacancy and rent growth stabilize across most markets," said Kelli Carhart, Executive Managing Director and leader of Multifamily Capital Markets for CBRE. "With inflation easing, we anticipate increased investment activity in the second half of 2023, notwithstanding capital markets volatility."
The average monthly net effective rent increased by 2.6% year-over-year in Q2 2023, consistent with the pre-pandemic five-year average of 2.7%, although significantly less than the record 15.2% in Q1 2022.
New construction deliveries of 91,400 units in Q2 2023 brought the four-quarter total to a record high 351,500. Declining construction starts in recent quarters will result in fewer new deliveries in 2024 and beyond.
Other Q2 2023 Multifamily Sector Highlights by CBRE: