Although asking rents rose and vacancy rates fell in the third quarter, the multifamily sector's recovery is expected to pull back slightly in the fourth quarter, says Kim Betancourt, director of multifamily economics and market research for Fannie Mae.
The vacancy rate declined from 7.5% in the second quarter to 7.25% at the end of the third quarter, according to preliminary data. Rent growth is up by about 1.5% since the beginning of the year, Betancourt says.
‘[The] second and third quarters are usually the most active time of the year for landlords signing on new tenants, and that seems to have been the case this past spring and summer,’ she wrote in a recently published analysis. ‘Other reasons for increased multifamily rental demand include a higher rate of tenant retention, declines in new-apartment construction projects completing and coming online, some former homeowners turning to renting, and job growth.’
Betancourt projects national vacancy rates will fall to about 7% this year, though she notes that stalled job growth could negatively impact multifamily fundamentals.
‘On the other hand, if job growth should start to pick up substantially, rent growth could climb higher than projected,’ she wrote.
SOURCE: Fannie Mae