U.S. Multifamily Market Snapshot — Q1 2022
In the first quarter of 2022, the U.S. multifamily market followed last year’s record-setting performance with another strong showing. According to Moody’s Analytics CRE, rent growth remained strong, climbing 15.6% year-over-year, higher than the 12.7% increase for all of 2021. New rent records were set in the third quarter of 2021, increasing 12.7% for the year. Rents are forecasted to increase 5.5% for 2022, and then average 3.0% over the next three years. The vacancy rate improved to 4.7%, slightly down from 4.8% at the end of 2021, and is expected to remain near that level through 2025.
The record-breaking investment activity continued through the first three months of 2022. Real Capital Analytics reported $63.0 billion in sales for the quarter, on pace to reach the second highest level on record. Cap rates remained at historic lows, averaging 4.9%, up slightly from 4.5% for 2021. Multifamily cap rates remained the lowest among major property types, followed by industrial (5.6%), office (6.5%), retail (6.5%), and hotel (8.2%).
The labor market continued to surge to start the year. According to the U.S. Bureau of Labor Statistics, a total of 2.0 million jobs were gained through the first four months of the year, although job creation remained 1.2 million below the pre-pandemic level. The unemployment rate improved to 3.6%, even as job openings continued to climb. Home prices continued their rapid accent, rising 19.8% year-over-year. However, the market showed signs of slowing amid continued limited housing inventory.
Here’s a look at the U.S. multifamily finance and investment key benchmarks for Q1 2022.