The national multifamily vacancy rate has decreased by 20 basis points to 5.6% during the third quarter. Considering the record level of apartment completions over the past few years, this decline is surprising but welcome news, said Marcus & Millichap national director of research and advisory services John Chang.

Nearly 163,000 new units came to market during the third quarter, and total apartment absorption for the quarter was more than 191,000 units. "That's the strongest quarter we've seen since the second and third quarters of 2021 when we had the post-COVID bounce," said Chang. The strong upward trend in apartment absorption reflects a continued housing shortage in the United States, as well as increasing confidence in household formation as inflation comes back under control and employment remains strong, he said.

Apartment completions have been relatively concentrated across the Sun Belt in Texas, Florida, Atlanta, Nashville, Phoenix and Charlotte. In those markets, absorption has been strong, but it also has been strong in metros with limited construction, including Washington, D.C.; Las Vegas; Portland, Oregon; Sacramento; Detroit; and San Francisco, noted Chang.