Lender data shows there is a slowdown of multi-family home construction.
Freddie Mac still projects multi-family gross income will remain strong nearing the end of the year as long the economy stays relatively stable.
Analysts say rent growth rose 16% from a year ago last June, and multifamily demand remains high despite rising costs. Counter to some expectations, demand hit an all-time high of 700,000 units in the first quarter of 2022, then slowed a bit to 430,000 in the second quarter.
Overall, Freddie Mac expects multi-family home growth to be near 7% at the end of this year. The national vacancy rate is projected to remain flat at 4.8%, this projection includes vacancy rate drops in more than 60% of the markets that Freddie Mac covers.
Gross incomes are expected to rise with Florida and Southwest markets expected to be the most robust. Jacksonville tops expectations for gross income growth at 12.7%, followed by Albuquerque, New Mexico, at 12.5%. Minneapolis growth is expected to be the lowest at 3.1%.
Looking ahead to 2023, Freddie Mac expects gross income growth to fall to 4.3% and vacancy rates to rise to 5.1%. While gross income growth will continue to contract, its growth rate will remain above the long-term average at 3.6%.