Renter demand for apartments continued to accelerate in the third quarter of 2017 as the market absorbed more than 70,000 units and the overall national vacancy rate for U.S. apartments continued to trend lower after turning sharply up at the end of last year.
“The third quarter (vacancy) numbers are a welcome sign (for owners) after the sharp increase at the end of last year. Overall, it was a strong third quarter, which was a nice surprise,” said Michael Cohen, CoStar director of advisory services, during this week’s State of the Multifamily Market Q3 2017 Review and Outlook. “We’re still in the golden age for multifamily, but we’re seeing signs of a gradual slowdown in the apartment market.”
Accounting for the slowing apartment market conditions is the gradual upward trend in the homeownership rate, which subtracts from the renter pool as millennials and other groups purchase single-family homes. The rate rose by 20 bps in the third quarter to 63.9%. A one-percentage point increase in the homeownership rate would subtract about 800,000 rental units from net absorption, Cohen said.