U.S. Multifamily Market Snapshot — Q3 2021

After struggling through the first half of the year, the U.S. multifamily market burst through in the third quarter of 2021. Moody’s Analytics REIS reported that Q3 2021 U.S. multifamily effective rent growth climbed 7.9% year-over-year, up from -1.6% for the second quarter. The vacancy rate improved to 4.7%, down from 5.3% in the previous quarter.

According to Real Capital Analytics, sales volume totaled $178.5 billion through the first nine months of 2021, increasing steadily throughout the year. Cap rates for multifamily transactions averaged 4.7%, down from 5.0% at the end of 2020 and remaining at historical lows.

The economy continued its recovery, although, at the end of October, total employment remained 4.2 million jobs below the previous high, according to the U.S. Bureau of Labor Statistics. The unemployment rate improved to 4.6%, well below the peak of 14.7%, although it had yet to reach the pre-COVID level of 3.5%. Home prices continued to make headlines, with the national S&P CoreLogic Case-Shiller Home Price Index rising 19.8% year over year in August. However, prices showed signs of slowing amid buyer fatigue.

Here’s a quick look at the Q3 2021 U.S. multifamily finance and investment benchmarks.

For more multifamily market insights, read our latest Small Multifamily Investment Report and check out our other multifamily research.