Strong regional disparities still show dramatic vacancy differences across the country

The national multifamily housing vacancy rate may have reached its peak of 7.9% in the third quarter of 2024. This marks a significant milestone as it is the first time in three years that the vacancy rate has not risen compared to the previous quarter.

This trend suggests that the multifamily vacancy rate may finally stabilize following its steep rise from a record low of 4.8% in the third quarter of 2021. Since then, the national vacancy rate has increased by 310 basis points and is 170 basis points higher than the pre-pandemic five-year average of 6.4%.

The forecast indicates that the vacancy rate may remain steady over the next three quarters, followed by an anticipated gradual decline. However, the national average obscures substantial regional differences. In particular, the vacancy rate in Sun Belt markets is disproportionately high, with Austin, Texas, leading the top 50 U.S. cities at 15.1%. Austin is followed by eight other Sun Belt markets with vacancy rates ranging from 13.8% to 11.6%, all well above the national average.

On the other hand, multifamily vacancy rates are lowest in coastal markets and the upper Midwest, with markets like Chicago and Milwaukee ranking among the lowest 10 multifamily markets. New York City has the lowest vacancy rate at just 2.8%, followed by Orange County, California, at 4.5%.

Historically, the gap between the highest and lowest vacancy rates among the top 50 U.S. multifamily markets reached a peak of 10.6 percentage points. This disparity is most pronounced when comparing Austin’s vacancy rate of 15.1% with Orange County’s 4.5%. This gap has widened significantly from a 6.3-point spread in 2015 and even from the 6.8-point difference observed at the national vacancy rate’s low in 2021.

The standard deviation in vacancy rates among the top 50 multifamily markets, excluding New York City, is now double what it was in 2015, underscoring the increasing variation in market conditions across the country. These stark contrasts highlight the importance of understanding localized trends, as the national vacancy rate may only partially capture the market-level fluctuations that currently characterize the multifamily sector.