For 2023 Multifamily Performance, Context is Key

Welcome to 2024! Amazingly, another year is already in the books. 2023 multifamily performance was something of a mixed bag and was particularly context dependent. For example, national net absorption in 2023 was about 150% higher than in 2022, but it was also lower than in any other recent year – including being around 50% lower than in 2020.  There are many other interesting examples along the same lines, but in this space today, it is time to dig into 2023 apartment demand for a final time.

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

Overall National Demand

Approximately 143,00 net units were absorbed across the nation in 2023. As already mentioned, this was well above last year’s dismal total but significantly below any other recent year. The post-pandemic era now features a historic high in annual net absorption in 2021, a historic low in 2022 and a move in the direction of normalcy in 2023.

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Despite all of the volatility of the last few years, apartment demand in the period was not far off of that from the three-year period immediately preceding the pandemic. In the 2017 through 2019 period, average annual net absorption nationally totaled about 306,000 units. In the 2021 through 2023 period that average was 286,000 units. The fact that the more recent three-year average is lower despite the benefit of the 2021 net absorption total brings into focus the demand struggles in 2022 and 2023. However, the similarity between the two averages is striking within the context of the rollercoaster feeling of the last few years.

A major difference in apartment demand in 2023 from 2022 was the timing and extent of the months in negative territory. National monthly net absorption was negative from August through December in 2022. In three of those five months, a net loss of at least 10,000 leased units occurred. At the peak of the losses, about 22,000 leased units were shed in November of 2022. In 2023 there were only three months with negative net absorption, and none saw a loss of even 6,000 net leased units.

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Price Class Demand

Net absorption rose in 2023 across the price classes, but the improvement was not uniform. The Class B and Class C subsets made particular progress. Net absorption for Class B properties of nearly 70,000 units was a more than 50% improvement from 2022. Despite the gain, the 2023 result was notably lower than in any recent year aside from 2022. However, this was the case across the price classes rather than being unique to Class B.

Class C saw an even larger positive swing in demand in 2023. After a net loss of approximately 22,000 leased units in 2022 this price tier managed a net gain of around 27,000 leased units in 2023. Once again, this level of demand was well below the longer-term average, but 2023 was nevertheless a step in the right direction. Class C properties also made a more pronounced move toward lease concessions last year in order to capture the demand growth than was the case for Class B properties. The availability of discounts for new residents rose by about 80% in 2023 for Class C properties and the average discount value rose by 15%. Each metric was higher only for Class D properties.

The top and bottom price tiers also saw improvement in demand last year, but to a lesser degree. Net absorption of just over 83,000 Class A units was more than in 2022, but by a margin of less than 3,000 units. This improvement was not enough to offset the increase in new units entering the market in the Class A group during the year.

Class D was the only price class to end 2023 in negative territory for net absorption after being joined there in 2022 by the Class C group. Even so, the net loss of approximately 36,000 leased units was less than the 42,000-unit decline from 2022.


National apartment demand in 2023 was more than double that of 2022. Also, 2023 apartment demand was less than half of the annual average from the pre-pandemic 2017 through 2019 period. This dichotomy highlights the extent to which a view of 2023 multifamily performance depends on context.

The robust overall improvement from 2022 was encouraging, as was the fact that the monthly troughs were much smaller, and that the largest gains came in the middle price classes. Further improvement in net absorption will be vital this year with new supply expected to remain high. In particular, the Class A and Class D tiers will need to more fully join in the rebound that began in the middle price classes in 2023.

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