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New Multifamily Supply Exceeds Strong Demand

U.S. Multifamily | Q4 2023

January 29, 2024 2 Minute Read

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Executive Summary

  • The overall multifamily vacancy rate increased by 20 basis points (bps) quarter-over-quarter to 5.4%. As the market absorbs a wave of new supply throughout 2024, the vacancy rate should increase slightly over the next few quarters before returning to its long-term average of 5.0%.
  • Construction completions of 140,900 units in Q4 brought the annual total to 416,500—the highest amount since CBRE began tracking the market in 1996. Fewer construction starts in recent quarters will lower deliveries in 2025 and beyond.
  • Net absorption was essentially unchanged quarter-over-quarter at 84,800 units, which was more than four times the pre-pandemic Q4 average.
  • Average monthly rent fell by 1.2% quarter-over-quarter in Q4 and was only 0.4% higher than a year ago at $2,166. Average rent growth likely will remain relatively flat over the short term before increasing slightly by mid-2024.
  • Q4 multifamily investment volume of $25.7 billion in Q4 brought the annual total to $117.5 billion, down by 60% from 2022. Nevertheless, the sector maintained the largest share of total commercial real estate investment volume at 32%.