- US apartment absorption within three months of completion has dropped to 45%, down from 75% in Q3 2021.
- The Midwest and South are seeing the highest levels of unleased units, while the Northeast and West show stronger absorption.
- Despite declining demand, robust apartment completions may help ease rent inflation in the coming months.
Absorption Slowdown
Multifamily absorption continues to cool as leasing activity slows across new apartment deliveries, per GlobeSt. According to the Census Bureau, only 45% of new apartment units are leased within three months. That’s down sharply from a 75% peak in Q3 2021.
Record Completions, Muted Demand
Over 126,000 units were completed in Q4 2024. It was the third straight quarter with more than 100,000 completions. While this adds supply, it has also weighed on multifamily absorption, leaving many units sitting vacant. The National Association of Home Builders (NAHB) says this could help ease rent inflation.
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Midwest and South Underperform
Multifamily absorption is weakest in the Midwest and South, where vacancy rates are highest. In these regions, 12% of apartments completed a year ago remain unoccupied. In contrast, the Northeast has just 2% of year-old units still vacant. The West fares slightly better at 6%.
Condo Absorption Steady
Condo and co-op absorption improved slightly to 67% in the latest quarter. Deliveries fell to 2,880 units, down from 4,793 in the prior quarter. That’s a long way off the 2018 peak of nearly 8,000 units.
Why It Matters
More new units are helping to slow rent increases. But regional gaps in absorption show that supply and demand are out of sync in some markets.
What’s Next?
Sun Belt and Midwest cities may continue to see slower leasing. Developers will need to focus on local market trends to better align supply with multifamily absorption and avoid oversupply.
