Freddie Mac: MF Construction is Fast, But Demand is Faster

McLEAN, VA—The multifamily asset class has been riding high for years but increasingly in some quarters this particularly glass is looking half empty. Sooner or later, it is thought, the robust pipeline will over take demand. The other side of this argument has been that demand will continue to meet and exceed whatever the supply side can throw at it. New figures from Freddie Mac give credence to the optimists. It notes that construction of apartment buildings has hit the highest monthly pace since the beginning of 2006. Absorption rates, though, are matching that pace.

The latest absorption rates for unsubsidized, unfurnished newly built apartments have been at the fastest pace in a decade: The Census Bureau reported that the latest 3-month and 6-month absorption rates had risen to 64% and 83%, respectively. In short, demand exists to absorb the new supply.