February 20, 2024

2024 National Multifamily Outlook Report: Supply-demand imbalance likely in 2024

Multifamily properties have been a preferred asset class for the past several years, but there is greater uncertainty in the sector at the start of 2024. We are pleased to present our 2024 National Multifamily Outlook, highlighting key economic trends, forecasts for property performance metrics, an analysis of the investment market and an overview of debt and equity conditions.

Report highlights:

The economy: The economy is forecast to expand more slowly in 2024 than it did in 2023. Employers are expected to add approximately 1.5 million net new jobs in the coming year, about half the 2023 total.
Supply and demand: New apartment construction is forecast to accelerate in 2024. Developers are anticipated to complete about 550,000 units this year, up from 475,000 units in 2023. With job growth likely to slow in 2024, absorption will total approximately 175,000 units.
Vacancy and rent: With completions outpacing absorption, vacancy is on pace to trend higher this year. The rate is forecast to rise 100 basis points, ending the year at 7.3%. Rents are expected to inch lower and will end 2024 essentially unchanged from 2022 levels.
Investment sales: The investment market slowed in 2023 but should gain momentum in the coming year. The heightened levels of construction will be one factor fueling the investment market, as new properties are sold at stabilization or during lease-up. Additionally, there will be some distressed sales, although these will account for a fraction of total transaction activity.
Debt and equity: Anticipated declines in interest rates and an accelerating pace of property sales should support greater activity in the capital markets. It will be more challenging obtaining capital for new development, but debt and equity will be available for acquisitions.

Outlook
The multifamily market outlook is mixed for 2024. Operators will face a more competitive market in the coming year, with the pace of new supply accelerating and renter demand expanding more slowly than in 2023. Despite these challenges, there should be greater transaction activity and a more favorable capital markets environment.

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