Houston Q4 Multifamily Market Report: Sales Activity Surges, Despite Rise in Construction
Highlights:
- The Houston multifamily market closed 2020 with a surge in new deliveries of apartments, pushing the vacancy rate higher. Construction is expected to be active in 2021 as well, but renter demand for apartments should accelerate as the economy gains momentum.
- Vacancy ticked up 30 basis points in the fourth quarter, reaching 6 percent. For the year, the rate rose 50 basis points, but current vacancy levels remain below the market’s cyclical high from a few years ago.
- After a decade of annual gains averaging between 3 percent and 5 percent, Houston apartment rents declined in 2020. Asking rents dipped 1.8 percent, ending the year at $1,082 per month.
- Multifamily sales activity accelerated in the fourth quarter. The median price rose in 2020, advancing 4 percent from 2019 to $137,800 per unit, while cap rates compressed to an average of 5.2 percent.
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