U.S. Multifamily Market Snapshot — Q2 2023

The U.S. multifamily market continued to slow during the second quarter of 2023. Moody’s Analytics CRE reported that average effective rents were up 3.8% year-over-year, down from the skyrocketing pace of the last two years. The vacancy rate rose slightly to 5.0%, up from 4.8% at the end of 2022, although demand remained strong.

Investment activity across the real estate landscape has slowed to a crawl, and multifamily has not been exempt, as the gap between buyers and sellers remains wide. According to MSCI, multifamily sales transactions totaled $55.6 billion through June 2023, on pace for the lowest annual total in nearly a decade. Additionally, the RCA CPPI apartment index fell 11.7%, the largest annual decline among major property types, although the monthly decline has been easing since the start of the year.

The U.S. job market posted its 31st consecutive month of payroll gains in July, as the unemployment rate remained near historical lows. Wage growth has cooled, although still above Federal Reserve targets, while job openings have remained elevated.

The housing market continues to show little signs of life, amid supply pressure, affordability constraints, and high interest rates. Home prices have fallen slightly year-over-year, although they increased in May for the second consecutive month. Now firmly into the summer buying season, prices are up more than 4.0% year-to-date, though remain 1.0% below the 2022 peak.

Here’s a look at the U.S. multifamily finance and investment key benchmarks for Q2 2023.

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