Although newly built multifamily units across the country continue to attract tenants, a new analysis from Redfin suggests that the overall supply of these apartments is outpacing demand. According to Redfin, 54% of newly built units were rented out within three months, but this absorption rate is the second-lowest in four years, second only to the first quarter of this year, when only 47% of units were leased within three months.
The analysis indicates that while the uptick in absorption is positive for landlords, they may be adjusting rents and offering concessions to attract new tenants.
"With only about half of new apartments renting out within three months, not only do renters have more choices, but they also likely have the ability to negotiate a better deal," said Redfin Senior Economist Sheharyar Bokhari. "There's a huge number of new apartments opening up, and building owners are competing with one another to fill them quickly."
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Redfin found that while the percentage of newly built studios leased within three months increased by 16 percentage points—from 42% in the first quarter to 58%—absorption rates for apartments with one or more bedrooms decreased by at least 5 percentage points. The most significant decline occurred with units of three or more bedrooms, which saw a 12 percentage point drop to 53% compared to the first quarter of 2023.
Meanwhile, completions of one- and two-bedroom units increased by at least 22% in the first quarter compared to a year ago. Studio completions, however, declined by 7.1% over the same period.
Redfin's analysis comes just weeks after U.S. Census Bureau data showed a 16% decline in housing starts for both single-family and multifamily residential construction in July.
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