Multifamily

Period of uncertainty tests span of vigorous leasing. Renters absorbed a net of nearly 147,000 units during the first quarter of this year, capping off a historic 12-month period for apartment leasing that lowered national vacancy by 90 basis points. Even in the face of elevated construction, vacancy compressed year over year in 48 of 50 major metros, with all three apartment classes noting reductions of 70 to 90 basis points. Since then, however, growing concerns over tariffs and rapid policy shifts have weakened both consumer and business sentiment, which may curb household formation, hiring activity and ultimately rental demand moving forward. Fortunately, the multifamily sector is on sound footing entering this period of uncertainty. At 5.0 percent in March, national vacancy was at its lowest point in two years and 50 basis points below the long-term average. At the\ same time, a pullback in construction is materializing, and recent job creation has been concentrated in sectors whose workforces historically slot into the renter pool. These dynamics, along with rising wages — up 4.4 percent year over year in the first quarter — should continue to aid household formation during a potentially inflationary period, allowing supply and demand to align over the near term.