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Research - MARCH 22, 2017

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U.S. multifamily vacancy rate remains low

by Jody Barhanovich

The U.S. multifamily vacancy rate in remained low fourth quarter 2016, according to Reis Inc. The rate dropped 10 basis points to 4.1 percent in fourth quarter 2016, down from 4.2 percent in third quarter 2016 and 4.3 percent at the end of 2015.

New apartment construction has slowed from a breakneck pace over the past few years, but because new construction is expected to exceed demand, Reis suggests this may be as low as the multifamily vacancy rate will go.

There were 195,734 new unit completions in 2016, compared with 210,272 units completed in 2015. According to Reis, completions will climb back up to 205,800 units in 2017 and then will begin to fall rather significantly in 2018.

Although it stands at a lower level, net absorption has remained healthy as new apartment construction slows, which means prospective home buyers have not abandoned the apartment market as rapidly as many had thought would do so by this stage of the expansion, according to Reis.

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