U.S. Multifamily Market Snapshot — August 2024
After skyrocketing through a boom cycle over the past two years, the U.S. multifamily market settled into a cycle of stabilization in the first half of 2024. Rents held steady, occupancy increased, and vacancy rates remained in line with historical averages, while investor sentiment remained positive. The construction pipeline continued to show signs of slowing amid rising construction costs, further contributing to the limited supply of housing nationwide.
Multifamily rent growth in the U.S. was down 1.0% year-over-year, according to the latest data from Moody’s Analytics CRE. The market followed the quick pandemic contraction with a strong recovery, and has now normalized into a more stable cycle. Although migration and demographic trends have settled, housing demand remains high amid limited supply.
MSCI Real Capital Analytics reported that sales volume was higher through the first six months of the year than for the same time period last year, as investors began to dip back into the market. The 12-month average cap rate was 5.3%, lower than historical averages, although it remained in an upward trend.
The latest Quarterly Survey of Apartment Market Conditions from the National Multifamily Housing Council (NMHC) signaled a second straight quarter of improved sales activity, and more favorable debt financing conditions, despite the persisting tight monetary policy environment.
Additionally, the NMHC’s Quarterly Survey of Apartment Construction & Development Activity reported that 70% of participants experienced construction delays, down from 81% in March.
Another signal showing the strength of the market was Freddie Mac’s Apartment Investment Market Index®, which increased 8.7% during the first three months of the year.
Looking ahead, the multifamily market is well positioned for success, driven by tailwinds of optimism such as favorable demographic trends, multiple expected rate cuts by the Federal Reserve, and dwindling new supply.
Here’s a look at the U.S. multifamily finance and investment key benchmarks for Q2 2024.
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