The story with national apartment demand in 2024 has broadly been notable improvement from 2023, but with remaining shortfall relative to the 2018 and 2019 pre-pandemic years. June was a continuation of that general trend. However, whereas in a typical year net absorption peaks in June, this year the month saw a slight decrease from May.

All numbers will refer to conventional properties of at least 50 units.

Demand Up Considerably from Last Year

Just more than 124,000 net units were absorbed across the United States in the first half of 2024. This was considerably higher than the roughly 73,000 net absorbed units in the same period last year and surpassed the 2022 by about 13,000 net units as well. However, in both 2018 and 2019, the last two years before the pandemic, net absorption through June exceeded 200,000 units.

The data was much the same when evaluating just the month of June. This year’s approximately 26,000 net absorbed units during the month was slightly higher than the combined total from 2022 and 2023 but was considerably lower than the 2018 and 2019 average of 40,000 units.

A major component of 2022 and 2023 apartment demand performance was the net loss of leased units in the final quarter of the year. It remains to be seen to what extent a similar phenomenon will occur this year, but the industry should have another few months to accumulate net absorbed units.

Progress Stalled in the Monthly Data

Despite some encouraging developments in the first half of the year, there remain some reasons for a cautious outlook. For one, even with improved demand, multifamily new supply will far outpace net absorption in 2024 for a third consecutive year. At the halfway point of the year, new units delivered were already more than double net absorbed units. That relationship will not find renewed balance in the fourth quarter as demand cools.

Another issue is that rather than apartment demand improving month-over-month toward a crescendo in the summer, net absorption has largely stagnated over the last four months. In March, national net absorption was slightly above 24,000 units. The April total was just under 24,000 units. May and June managed to break the 25,000-unit threshold, but only barely – and the June total was slightly lower than the May total.

It is possible, but unlikely, to have peak monthly net absorption for a year occur in the second half of the year. August of 2023 would be an example of just such an outlier. As would August of 2020 as the initial pandemic disruption that stifled demand early in the year was easing. In general, the high-water mark tends to come in May or June. Were that to be the case for 2024 apartment demand, this year would have the second-lowest monthly peak in absorption of the last eight years – bettering only 2022.

Takeaways

As has been the case all year up to this point, June apartment demand was something of a mixed bag. Net absorption continues to outperform both 2022 and 2023, but a shortfall remains between the current level of demand and the pre-pandemic years that provide something of a baseline against which to contextualize the high variance of the post-pandemic period.

Short of an unexpected exogenous event, which is certainly possible, 2024 appears to be shaping up according to expectations. Improved demand insufficient to offset new supply putting steady downward pressure on occupancy and rent growth. One question that remains is – will the industry manage a late bloom of demand before the winter months arrive?

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