CBRE: Multifamily Market Continues to Stabilize

(Image courtesy CBRE)

CBRE, Dallas, found the multifamily market showed signs of stabilization in the second quarter.

The market recorded 70,200 units of net absorption in the quarter, which CBRE pegs as the first significant amount of quarterly demand since Q1 2022.

New construction deliveries were at 91,400 units, which brought the trailing four-quarter total to a record of 351,500. However, CBRE notes construction starts have been declining over recent quarters.

The overall multifamily vacancy rate increased by 10 basis points from Q1 to 5%, which is right at the long-term average and more stable than the past few quarters.

Another sign of stabilization back to pre-pandemic norms: average monthly net effective rent increased by 2.6% year-over-year, more in line with the pre-COVID five-year average of 2.7%. From Q1, rent increased by 1.1%, which is typical seasonality.

However, multifamily investment volume was at $27.5 billion, far below Q2 2022’s $95.6 billion but an increase from Q1. Except for Q2 2020 due to the pandemic, this was the lowest Q2 volume since 2014 and 27% less than the 2013-to-2019 quarterly average, CBRE noted.

“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.”