November 10, 2020

Houston Q3 Multifamily Market Report: Absorption Positive but Cooling, Fueling Vacancy Uptick

Highlights:

The Houston multifamily market recorded some softening during the third quarter, but current vacancy and rents are not dramatically different than levels from one year ago. There is uncertainty surrounding the pace and the timing of an economic recovery, which is expected to weigh on market sentiment in the coming quarters.
Apartment vacancy in Houston ticked up 10 basis points during the third quarter, following a 20-basis-point increase in the second quarter. At 5.7 percent, the current vacancy rate is 40 basis points higher than one year ago.
After posting minimal increases in recent periods, local asking rents fell 0.8 percent during the third quarter, ending the period at $1,096 per month. Year over year, asking rents in the Houston metro are up just 0.2 percent.
Sales of apartment buildings remained modest during the third quarter, and transactions year to date are lagging 2019 levels by nearly 45 percent. In transactions that are closing, prices have inched higher from the 2019 median price, while cap rates have compressed slightly.