The U.S. multifamily market posted notable gains in the third quarter amid declining new inventory and modest rent growth. According to a new report by CBRE, the national multifamily vacancy rate decreased by approximately 20 basis points to 5.3%, despite apartment completions reaching 124,300 and net absorption hitting 153,000 units.

CBRE found that Q3's net absorption was the second highest rate of absorption for a third quarter since the firm began tracking the market in 1985, and that it reflects a 72% increase above pre-pandemic third-quarter averages. Demand for housing outpaced the new supply for the second consecutive quarter; however, even as vacancy trends toward its long-term average of 5.0%, apartment owners continue to face challenges with flat rents and lower transaction volumes.

CBRE found that 26 of the 69 U.S. markets it tracks had negative rent growth compared to the third quarter of 2022. This marks a slight improvement over Q2, but overall, rents are rising in markets with limited construction and declining in areas with increasing inventories. The Northeast, Pacific, and Midwestern regions saw year-over-year rent growth, while the Southeast, South Central, and Mountain regions reported declines.