Strong absorption and declining vacancy rates are bolstering the nation’s multifamily market, according to new research from CBRE.
In the fourth quarter, positive net absorption—the change in the number of occupied units—reached 183,600 units. This marked the strongest fourth quarter performance on record and 12 times more than the pre-pandemic fourth quarter average. It also was the third consecutive quarter where demand surpassed new completions.
CBRE found that all 69 markets it tracks saw positive net absorption for the fourth quarter, with New York leading the way with 18,600 units. Houston and Dallas followed with 10,400 and 8,800 units, respectively. In addition, 64 markets saw net absorption exceed new supply, up from 50 in the third quarter and 45 in the second quarter.
The overall multifamily vacancy rate decreased in the fourth quarter to 4.9%, below its long-term average of 5%. Rates also declined in 63 markets quarter over quarter, up from 56 markets in the third quarter.
Average monthly rents saw a bump, increasing 0.5% year over year to $2,176. According to CBRE, with construction completions slowing and robust absorption, rent growth is expected to accelerate in the coming months.
The Midwest and Northeast continued to experience strong year-over-year rent growth at 2.8% and 2.3%, respectively, followed by the Pacific region at 0.4%. CBRE noted that rents decreased in the Southeast, South Central, and Mountain regions in the fourth quarter.
Investment activity experienced a boost in the fourth quarter, with $43.4 billion deployed into the sector, increasing 59% year over year.
“The strong performance of the multifamily market reflects significant demand for housing and signals the continued strengthening of fundamentals,” said Kelli Carhart, leader of multifamily capital markets for CBRE. “We expect to see more positive gains throughout 2025 and then accelerating in 2026, fueling increased multifamily investment activity.”
