The percentage of new apartment units that were absorbed within three months after completion continued to trend lower, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. The number of new multifamily units completed pulled back slightly in the fourth quarter of 2024 but remained elevated near historical highs after posting a third straight quarter of above 100,000 completions.   Apartments The percentage of apartments absorbed within three months has fallen significantly from its peak of 75% in the third quarter of 2021, as shown in the graph above. Currently, the rate stands at 45%, coupled with 126,100 units completed in the fourth quarter of 2024. The large number of units completed each quarter continues to be a positive sign on the overall inflation front, as shelter inflation remains stubbornly high. More new apartments should help slow rent growth to lower levels in the coming months. Along with the three-month absorption rate and completions, SOMA reports absorption rates within six-months, nine-months, and 12-months of completion. Solely focusing on the 12-month absorption rate, it remained at its lowest level since the start of the pandemic, registering a rate of just 90%. This means that 10% of the 99,850 apartments completed in the first quarter of 2024 remain unoccupied a year after completion. Regional SOMA data indicates that apartments completed over a year ago remain unoccupied primarily in the Midwest (12%) and the South (12%). The Northeast reported only 2%, while the West reported 6%. Condominiums and Cooperative Units The 3-month absorption rate for new condominiums and cooperative units rose one percentage point up to 67%. Total completions of new condominiums and cooperative units, according to the SOMA, fell in the fourth quarter from 4,793 to 2,880. Completions of these units peaked in the second quarter of 2018 at 7,996 and has steadily fallen since then. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

The percentage of new apartment units that were absorbed within three months after completion continued to trend downwards, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. The number of new multifamily units completed reached a new peak in the third quarter of 2024, its third straight quarter recording a record high number of completions. Apartments The percentage of apartments absorbed within three months has fallen significantly from its peak of 75% in the third quarter of 2021, as shown in the graph above. Currently, the rate stands at 50% which is coupled with an uptick in completions, as the SOMA estimates show a new high of completions at 143,600 units in the third quarter of 2024. This outpaces the level of completions a year ago, which stood at 84,830, by almost 70%. The level of multifamily units reaching completion has onlycontinued to grow since the number of units under construction peaked at over one million in 2023. Along with the three-month absorption rate and completions, SOMA reports absorption rates within six-months, nine-months, and 12-months of completion. Solely focusing on the 12-month absorption rate, it fell to its lowest level since the start of the pandemic, registering a rate of just 90%. This means that 10% of the 90,630 apartments completed in the fourth quarter of 2023 remain unoccupied. As completions have risen over the past year, the supply of available apartments has increased. Additionally, regional SOMA data points to the Northeast as a possible explanation for a lower 12-month absorption rate, as nearly 23% of the fourth quarter completions in 2023 remain unoccupied. This is well above any other region, with the Midwest at 7%, the South at 9% and the West at 5%. Condominiums and Cooperative Units The absorption rate for new condominiums and cooperative units fell to 63% for the quarter, down 1 percentage point from the previous quarter. Total completions of new condominiums and cooperative units, according to the SOMA, fell over the quarter from 4,452 to 4,008. Quarterly completions of these units peaked in the second quarter of 2018, at 7,996 completions but have steadily fallen since. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.