According to global property consultant CBRE, U.S. multifamily investment volume in 2022 decreased by 19% year-over-year to $278.8 billion but was the second largest annual total on record. Volume in Q4 fell by 34% quarter-over-quarter and 70% year-over-year to $48 billion.
CBRE further reports new construction deliveries of 100,300 units in Q4 brought the total for 2022 to 341,200–the highest annual amount since the 1980s. With more than 800,000 units under construction at year’s end, similar annual delivery totals are expected over the next two years.
Q4 of 2022 marked the third consecutive quarter of negative net absorption (-15,600 units), significantly less than the -52,800 units of negative absorption in Q3. CBRE expects that demand will turn positive in Q1 2023.
Negative absorption and significant speculative completions drove the overall vacancy rate up by 70 basis points quarter-over-quarter to 4.6%. While this is nearly double the record low of 2.4% in Q1 2022, it remains below the long-run average of 5.0%.
Average monthly net effective rent increased by 6.7% year-over-year in Q4, down significantly from the record 15.2% year-over-year increase in Q1 but well above the pre-COVID average of 2.7%. Although rents fell 0.8% quarter-over-quarter in Q4, this is typical from year to year as leasing and rent growth slows in the winter, says CBRE.