New apartment absorption continues to trend lower as the market works to lease out a record number of units completed last year.
According to the Census Bureau’s Survey of Market Absorption of New Multifamily Units (SOMA), the percentage of new apartment units absorbed within three months has fallen significantly from its peak of 75% in the third quarter of 2021 to 45% today. The number of new multifamily units began to taper during the fourth quarter but remains elevated following three straight quarters of more than 100,000 completions, a National Association of Home Builders (NAHB) report said. More than 126,000 units were completed during the fourth quarter.
NAHB said the large number of units completed each quarter is a positive sign on the overall inflation front, as shelter prices remain stubbornly high.
Recommended For You
“More new apartments should help slow rent growth to lower levels in [the] coming months,” said NAHB.
The 12-month apartment absorption rate remained at its lowest level since the start of the pandemic at 90%. That means nearly 100,000 apartments completed during the first quarter of 2024 remained unoccupied a full year after completion. This dynamic is most prominent in the Midwest and the South, where 12% of year-old units remain unoccupied. Meanwhile, only 2% of apartments completed a year ago in the Northeast remain unoccupied, while 6% of those in the West have yet to attract renters.
The three-month absorption rate for new condominiums and cooperative units ticked up a percentage point to 67% as total completions of these units fell in the fourth quarter from 4,793 to 2,880, according to the SOMA. Completions peaked in the second quarter of 2018 at nearly 8,000 and have fallen steadily since then, said the report.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
