Redfin: New Apartments See Slightly Stronger Demand

(Image courtesy of Mathias Reding/pexels.com)

Redfin, Seattle, found almost half of apartments built in Q1 were rented out within three months, a slight increase from Q4.

Looking at units built in Q1, 48% were leased in the first three months after they were completed. That compares with 47% in Q4 2024 and 49% in Q1 2024.

In data going back to 2012, absorption hovered in the 50%-70% range. The absorption rate shot up in the immediate post-pandemic era, hitting 74% rented out within three months in Q3 2021. But since then, the rate has fallen significantly.

The recent uptick may be due, in part, to the fact that the number of new apartments hitting the market has started to fall. After a high point of 142,900 completed in Q3 2024, 122,700 were finished in Q4 2024 and 97,370 were completed in Q1, the most recent quarter for which Redfin had data.

Renters have fewer options to choose from, meaning landlords are able to fill units at a faster clip.

Also, Redfin noted, apartment building permits have fallen below pre-pandemic levels, indicating that completions are going to continue to decrease.

Redfin analyzed data from the U.S. Census Bureau on absorption rates for unfurnished, unsubsidized, privately financed rental apartments in buildings with five or more units.