Multifamily absorption is set to be more modest this year after demand for rental units significantly outperformed forecasts during the past 12 months, according to Northmarq’s 2025 national sector outlook.
Renters moved into about 480,000 units on net last year, nearly double the total in 2023. The surge in renter demand occurred in most major metropolitan areas and offset much of the new construction that was delivered, according to the report.
Typically, absorption is closely tied to new job creation. Every eight jobs created commonly results in one unit of net absorption, but the ratio was closer to five-to-one last year. This suggests that multifamily operators captured a larger-than-expected share of new households created as the economy expanded. This trend was likely exacerbated by a slowing pace of renters transitioning to home ownership, according to Northmarq. First-time homebuyers accounted for the lowest share of transactions in more than 40 years, data from the National Association of Realtors shows.c
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