While the numbers tell a story of explosive growth and a $900 billion valuation, the true state of the U.S. multifamily housing market is far more complex than a simple headline.
Key Takeaways
- In 2023, the U.S. multifamily housing market reached a total inventory of approximately 45.2 million units
- Multifamily housing starts increased by 12% year-over-year in Q4 2023, totaling 456,000 units nationwide
- The multifamily sector accounted for 22% of all new housing completions in 2023, up from 18% in 2022
- Multifamily permits issued totaled 485,000 units in 2023 across 50 major markets
- Under-construction multifamily units peaked at 1,025,000 in Q3 2023
- 2023 completions reached 442,000 units, with 60% in buildings of 50+ units
- Multifamily absorption rates averaged 95% for new deliveries in Q4 2023
- National multifamily occupancy rate was 94.2% in December 2023
- Physical occupancy for Class B/C properties hit 93.5% in 2023
- National average rent increased 2.9% YoY to $1,695 in December 2023
- Asking rents for Class A multifamily rose 4.1% in 2023
- Median multifamily rent hit $1,702 across top 100 markets in 2023
- National multifamily sales volume totaled $148 billion in 2023, down 45% YoY
- Average multifamily cap rate rose to 5.6% in Q4 2023
- $55 billion in multifamily debt originated in Q4 2023 alone
Multifamily housing saw strong construction growth and high demand in 2023.
Absorption & Occupancy
1Multifamily absorption rates averaged 95% for new deliveries in Q4 2023
Verified2National multifamily occupancy rate was 94.2% in December 2023
Verified3Physical occupancy for Class B/C properties hit 93.5% in 2023
Verified4320,000 units absorbed in top 50 markets in 2023
Directional5Economic occupancy averaged 92.8% nationally in 2023
Single source6Suburban multifamily occupancy rose to 95.1% by end-2023
Verified796% of new Class A units leased within 12 months in 2023
Verified8Vacancy rate in Sun Belt markets averaged 7.2% in 2023
Verified9Same-store occupancy growth was 0.8% YoY in 2023
Directional1085% absorption rate for deliveries over 300 units in 2023
Single source11National vacancy stabilized at 6.5% for stabilized properties in 2023
Verified12Occupancy in Midwest markets reached 94.8% average in 2023
Verified13Concessions impacted occupancy by 1.2% equivalent in high-supply markets 2023
Verified1492% of units in 2022 deliveries were absorbed by end-2023
Directional15Economic vacancy rate for value-add properties was 8.1% in 2023
Single source16Occupancy recovery post-pandemic reached 93.9% nationally by 2023
Verified17Texas markets absorbed 75,000 units despite high supply in 2023
Verified18Average lease-up pace for new properties was 8% per month in 2023
Verified1994.5% occupancy for garden-style apartments in 2023
Directional20High-rise multifamily vacancy at 9.3% in coastal cities 2023
Single source21Institutional portfolios achieved 95.2% occupancy in 2023
Verified222023 absorption exceeded deliveries by 10,000 units nationally
Verified23Occupancy rate for affordable multifamily was 96.1% in 2023
VerifiedAbsorption & Occupancy Interpretation
The multifamily market appears robust on the surface, with national occupancy hovering in the mid-90s, but beneath that stable veneer lies a tale of two sectors where affordable and suburban properties are essentially full while new, high-end towers in competitive markets must aggressively chase tenants.
Construction & Supply
1Multifamily permits issued totaled 485,000 units in 2023 across 50 major markets
Verified2Under-construction multifamily units peaked at 1,025,000 in Q3 2023
Verified32023 completions reached 442,000 units, with 60% in buildings of 50+ units
Verified4Starts for multifamily structures over 5 units fell 10% to 380,000 in 2023
Directional528% of new multifamily supply was in the Sun Belt in 2023
Single source6Average construction cost for multifamily rose 7.2% to $185 per sq ft in 2023
Verified72023 saw 15,200 multifamily projects start nationwide
Verified8Completions in top 10 markets totaled 180,000 units in 2023
Verified9Multifamily groundbreakings declined 22% YoY to 290,000 units in 2023
Directional1035% of 2023 supply was luxury Class A product
Single source11Total multifamily pipeline shrank 5% to 950,000 units by year-end 2023
Verified12Construction labor costs for multifamily up 9% in 2023
Verified132023 deliveries averaged 36,800 units per month nationally
Verified14Share of multifamily starts in total housing starts was 24.5% in 2023
Directional15Over 600,000 units completed in buildings with amenities in 2023
Single source16Material costs for multifamily construction increased 6.8% YoY in 2023
Verified1742% of new supply targeted millennials in 2023
Verified18Starts-to-completions ratio for multifamily was 1.3:1 in 2023
Verified19Urban multifamily deliveries up 18% to 210,000 units in 2023
Directional20Average time to stabilize new multifamily properties was 14 months in 2023
Single source212023 multifamily construction financing totaled $120 billion
Verified22Subsidized multifamily starts fell 15% to 45,000 units in 2023
VerifiedConstruction & Supply Interpretation
Amid a towering yet volatile pipeline, the multifamily sector in 2023 was a frenzied sprint of luxury completions and Sun Belt expansion, all while being soberingly kneecapped by soaring costs, hesitant groundbreaking, and a sharp decline in affordable supply.
Investment & Cap Rates
1National multifamily sales volume totaled $148 billion in 2023, down 45% YoY
Verified2Average multifamily cap rate rose to 5.6% in Q4 2023
Verified3$55 billion in multifamily debt originated in Q4 2023 alone
Verified4Pricing per unit averaged $245,000 in 2023 transactions
Directional5Institutional multifamily investment share was 68% of total volume in 2023
Single source6Cap rates for Class A properties compressed to 4.9% in gateway markets 2023
Verified7$280 billion in multifamily loans outstanding via Fannie Mae/Ginnie in 2023
Verified8Value-add multifamily cap rates averaged 6.2% in 2023
Verified9Foreign investment in U.S. multifamily dropped to 4% of volume in 2023
Directional10Average multifamily IRR for core investments was 7.1% in 2023
Single source11Debt service coverage ratio averaged 1.45x for new loans in 2023
Verified12Sun Belt multifamily cap rates at 5.3% average in 2023 sales
Verified13$42 billion in bridge lending for multifamily in 2023
Verified14Multifamily equity cap rates expanded 40 bps to 6.1% in 2023
Directional15REIT multifamily portfolios traded at 25x FFO multiple in 2023
Single source16Construction loan rates averaged 6.8% for multifamily in 2023
Verified17$110 billion in permanent loans originated for multifamily 2023
Verified18Average yield on multifamily bonds was 5.2% in 2023
Verified19Opportunistic multifamily investments returned 12.5% IRR in 2023
Directional20Delinquency rate on multifamily CMBS rose to 1.8% in 2023
Single source21Core multifamily pricing per door fell 8% YoY to $220,000 in 2023
Verified22Leverage ratios for multifamily deals averaged 65% LTV in 2023
Verified23Mezzanine debt volume for multifamily hit $15 billion in 2023
VerifiedInvestment & Cap Rates Interpretation
Last year's multifamily market was a masterclass in controlled chaos, where even as the spigot of capital slowed to a relative trickle, the smart money diligently rerouted itself toward premium assets and forced yields from the fringes.
Market Size & Growth
1In 2023, the U.S. multifamily housing market reached a total inventory of approximately 45.2 million units
Verified2Multifamily housing starts increased by 12% year-over-year in Q4 2023, totaling 456,000 units nationwide
Verified3The multifamily sector accounted for 22% of all new housing completions in 2023, up from 18% in 2022
Verified4Absorption of new multifamily units hit 320,000 in 2023, marking a 5-year high
Directional5Institutional ownership of multifamily properties grew to 15.3 million units by end of 2023
Single source6The U.S. multifamily market cap rate averaged 5.4% in 2023, down from 5.8% in 2022
Verified7Multifamily housing represented 35% of new rental supply in urban markets in 2023
Verified8Total multifamily under-construction inventory stood at 1.1 million units as of Q1 2024
Verified9The sector's annualized rent growth was 3.2% in 2023 across top 50 markets
Directional10Multifamily completions surged 25% to 440,000 units in 2023
Single source112023 saw $195 billion in multifamily sales volume nationally
Verified12The average age of U.S. multifamily properties is 28 years as of 2023
Verified13Multifamily market size projected to reach $1.2 trillion by 2028, growing at 5.1% CAGR from 2023
Verified14In 2023, 18% of U.S. households rented multifamily units, totaling 20.5 million households
Directional15Multifamily vacancy rate averaged 6.8% in 2023, stable from prior year
Single source16New supply deliveries totaled 510,000 units in top metros in 2023
Verified17U.S. multifamily debt outstanding reached $1.4 trillion in Q4 2023
Verified18Share of multifamily in total rental stock increased to 42% by 2023
Verified192023 multifamily NOI growth averaged 4.5% nationally
Directional20Total multifamily units permitted rose 8% to 520,000 in 2023
Single source21Multifamily housing market valued at $900 billion in 2023
Verified22Institutional investors controlled 22% of multifamily stock in 2023
Verified23Average multifamily property size was 245 units in 2023 transactions
Verified24U.S. multifamily rent collections reached 97.5% in 2023
Directional25Multifamily sector contributed 1.2% to GDP in 2023
Single source26Total value of multifamily assets under management hit $2.1 trillion in 2023
Verified272023 saw 15% growth in Class A multifamily inventory in suburbs
Verified28Multifamily market absorption rate was 92% for new deliveries in 2023
Verified29U.S. multifamily employment supported 2.8 million jobs in 2023
Directional30Projected 4.2% annual growth in multifamily demand through 2027
Single sourceMarket Size & Growth Interpretation
America's housing crisis has officially spawned a polite, institutional-scale real estate monster that, in 2023, was feverishly building and buying apartments at a record clip, absorbing them just as fast, and quietly evolving into a $2.1 trillion behemoth that now owns nearly a quarter of our rental stock while managing to keep rents climbing and vacancies stable.
Rents & Affordability
1National average rent increased 2.9% YoY to $1,695 in December 2023
Verified2Asking rents for Class A multifamily rose 4.1% in 2023
Verified3Median multifamily rent hit $1,702 across top 100 markets in 2023
Verified4Rent growth slowed to 0.5% in Q4 2023 nationally
Directional5Effective rents increased 3.5% YoY to $1,628 in 2023
Single source642% of renters spent over 30% income on rent in multifamily in 2023
Verified7Luxury rents grew 5.2% while workforce housing up only 1.8% in 2023
Verified8Average rent per sq ft was $2.18 in urban multifamily 2023
Verified9Rent affordability ratio averaged 28.5% of median income in 2023
Directional10Concessions equaled 4.2 weeks of free rent in high-supply areas 2023
Single source11Year-end 2023 rents 15% higher than pre-pandemic levels
Verified12Suburban rents outperformed urban by 1.2% growth in 2023
Verified131-bedroom multifamily rents averaged $1,512 in 2023
Verified14Rent-to-income ratio reached 32% for young adults in multifamily 2023
Directional15Effective rent growth for renewals was 4.8% in 2023
Single source162-bedroom units saw 3.1% rent growth nationally in 2023
Verified17Rent growth in Sun Belt slowed to 2.1% YoY by end-2023
Verified18Affordable housing rents capped at $1,200 average in 2023
Verified19Lease comps showed 1.7% growth for Class B properties in 2023
Directional20Rent delinquency averaged 2.3% in multifamily 2023
Single source21Studios rents up 2.8% to $1,450 average in 2023
Verified2235% of multifamily renters were rent-burdened (>30% income) in 2023
Verified23Rent per unit NOI contribution fell 0.5% in oversupplied markets 2023
VerifiedRents & Affordability Interpretation
The data paints a picture of a market where renters are increasingly squeezed by luxury-led growth, forcing concessions from landlords in overbuilt areas while affordability quietly crumbles like a dry lease agreement.
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