🏢 Multifamily Absorption Hits All-Time High in Q2 2024: A Market Surge Worth Noting

Record-Breaking Demand

In the dynamic landscape of U.S. real estate, the multifamily sector has witnessed an extraordinary surge. According to RealPage Market Analytics, apartment demand reached unprecedented levels in the year ending Q2 2024, with a staggering 390,000 units absorbed. This figure ranks as the eighth-largest annual absorption rate since the turn of the millennium. Notably, only three other periods—namely, the pandemic boom (mid-2021 to mid-2022), Q3 2018, and Q4 2000—have seen higher absorption rates.

Zooming In: H1 2024 Highlights

In the first half of 2024, an impressive 257,000 units were absorbed, nearly matching the peak seen during the pandemic era (270,000 units in H1 2021). Despite robust demand, supply growth continues to outpace absorption. Over the past year, more than 500,000 new market-rate units were delivered—a remarkable 45% increase compared to the previous year. Anticipate an additional 629,000 units hitting the market within the next 12 months.

Regional Dynamics

Southern Dominance: The South emerged as the powerhouse, absorbing a whopping 226,000 units in Q2 2024—almost 60% of the nation’s total. Remarkably, this region holds only 42% of the total multifamily units.
Western Revival: The West experienced a resurgence, with 89,000 units absorbed—the best performance in two years.
Northeast and Midwest: These regions posted more modest absorption figures: 30,500 units in the Northeast and 44,100 units in the Midwest.

Rent Growth Insights

Midwest Takes the Lead: Lower inventory growth in the Midwest fueled rent increases. Meanwhile, areas with substantial new supply—such as Austin, Atlanta, and Dallas—faced significant rent cuts.
Supply vs. Rent: The delicate balance between supply and demand stabilized occupancy rates at 94.2% in June, maintaining consistency for three consecutive months. However, rent growth remains modest due to the influx of new deliveries. Expectations for significant rent hikes in 2024 are tempered by the market’s robust demand and abundant supply.

📊 Key Takeaway

The multifamily market is closing the gap between supply and demand, resulting in a stable environment. While rent growth remains cautious, the strong demand signals a promising future for investors and renters alike.