Why has the U.S. multifamily market been so resilient for so long? It comes down to demand.
Just consider the numbers from the third quarter 2024 U.S. multifamily capital report from Newmark: As of the third quarter of 2024, annual demand for multifamily units exceeded the new supply of these units in 48 of the top 50 U.S. markets.
This marks the fourth consecutive quarter in which at least 47 of the top 50 U.S. markets saw demand outpace supply.
Newmark reported, too, that quarterly demand reached 192,649 apartment units in the third quarter of 2024, a year-over-year increase of 134.6%. That exceeds the third-quarter long-term average by 117.3%. The rolling fourth-quarter demand rose to 488,773 units, continuing its acceleration for six consecutive quarters.
The message is clear: The United States does not have nearly enough apartment units to meet demand. Partly because of this, U.S. multifamily vacancy rates and rents remain strong.
Developers are responding by adding new units. Newmark reported that developers delivered 162,595 apartment units in the third quarter of 2024, surpassing the previous record of 149,896 units delivered in the second quarter of this year.
Despite the new units, vacancy rates are holding steady. Newmark said that after peaking at 5.9% in the first quarter of this year, the national vacancy rate declined by 30 basis points to 5.6% in the third quarter of 2024. This vacancy rate is 10 basis points higher than a year ago, but Newmark reports that vacancy rates appear to have stabilized in the multifamily sector.
The multifamily sector has also been resilient when it comes to sales volume. In its report, Newmark said that U.S. multifamily sales volume totaled $35.8 billion in the third quarter of 2023, increasing 9.3% on a year-over-year basis.
Multifamily as of the end of the third quarter held the largest share of investment sales among all U.S. commercial real estate types at 34.9%.
