Houston Multifamily Market Report

Housing dynamics support Class A momentum. Houston’s vacancy rate in luxury-tier units fell 10 basis points year-over-year to 7.1 percent in March 2024, the only segment to record an annual contraction. This was due, in part, to relatively reduced pressure from construction. Metrowide apartment supply increased by 3.1 percent during the 12-month period ending in the first quarter, a rate that was exceeded by 10 of its Sun Belt peers, including the three other major Texas markets. Demand for Class A units, meanwhile, is reinforced by historically steep barriers to homeownership for prospective first-time buyers. During the first quarter of 2024, the difference between an average effective Class A rent and a typical monthly mortgage payment on a median-priced home was wider than $1,100. Just two years ago that affordability gap was about half that size. Luxury-tier vacancy is tightest in Alief, Bear Creek, Brazoria County, North Central Houston and Sugar Land-Stafford.