According to a recent report from Redfin, only 47% of newly constructed apartments completed in the fourth quarter of 2023 were rented within three months. This is a significant decrease from the previous year’s rate of 60%, and marks the lowest seasonally-adjusted share on record since Q1 of 2020 when the housing market was brought to a halt by the pandemic.
Redfin notes that this slower lease-up can be attributed to an influx of new apartments hitting the market, resulting in building owners competing for tenants. In fact, there were over 90,000 new apartments completed in Q4 last year – second only to Q2’s numbers since records dating back to 2012.
Despite rental vacancy rates remaining at around 6.6% for three consecutive quarters – their highest level since before COVID-19 – Redfin points out that they are no longer increasing as they did during lockdowns.
While apartment developers have slowed down on starting new projects (with multifamily building starts now below their historical average), completions remain near record highs due to many construction projects initiated during pandemic moving frenzies now reaching completion according to Redfin analysis.
