Record Deliveries Slow Multifamily Rent Growth

Executive Summary

• Average multifamily rent growth slowed to just 0.7% year-over-year in Q3, down significantly from the record 15.2% increase in Q1 2022. Markets with the most construction deliveries saw the biggest declines in rent growth.
• New deliveries of 114,600 units in Q3 brought the trailing four-quarter total to 376,500—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 of 82,100 units in Q3 reflected a rebound in typical seasonal demand this summer that had been lacking in 2021 and 2022 when the market was adjusting to pandemic-related migration patterns.
• The overall multifamily vacancy rate increased by just 10 basis points (bps) quarter-over-quarter to 5.1%, slightly higher than its long-term average of 5.0%. This was equal to the 10-bp increase in Q2 but less than that of Q1, indicating that supply and demand dynamics are stabilizing.
• Although total multifamily investment volume of $29.0 billion in Q3 was well below the $75.8 billion of a year ago, the sector maintained the largest share of commercial real estate investment volume in Q3 with 34%.