Putting 1st Quarter 2024 Apartment Demand in Perspective

Quarterly apartment demand jumped meaningfully in the first three months of 2024, another indication of a return to seasonal market norms for the U.S. apartment market.

Quarterly absorption went from just over 49,000 units in 2023’s 4th quarter to more than 103,800 units in 2024’s 1st quarter, according to data from RealPage Market Analytics. If you don’t count the last three years of unprecedented behavior triggered by the COVID-19 pandemic, it’s perfectly typical for absorption to get stronger in 1st quarter after the seasonal slump in 4th quarter. But in the early months of 2024, apartment demand more than doubled.

On average, over the course of the past decade (not including the haywire years of 2021-2023), 1st quarter tended to achieve demand for about 52,231 units. That was 39,970 units more than 4th quarter’s average volume. From that perspective, it’s clear the jump was quite a bit above average in 2024, as 1st quarter demand was twice the long-term volume and was 54,663 units ahead of 2023’s 4th quarter showing.

Historically, 1st quarter demand isn’t even the time when most of the year’s absorption generally takes place. Over the past decade, 1st quarter has captured only 4% of the year’s total demand volume. Given that demand in the early months of 2024 was well ahead of the decade average, we might be in for a banner year for absorption.

Quarterly apartment demand has been positive for five consecutive quarters now, which is quite the comeback after three quarters of deep net move-outs in the last three quarters of 2022. And absorption in 1st quarter was not that far behind historically high apartment supply.

Concurrent completion volumes have steadily increased, as well. Quarterly deliveries broke the 100,000-unit mark in 2nd quarter 2023, for the first time since RealPage began tracking the market in the early 1990s. Since then, completion volumes have increased steadily every quarter. In the first three months of 2024, roughly 135,600 units wrapped up construction, the biggest volume the U.S. has ever received in a single quarter.

Strong quarterly demand took annual absorption to over 317,000 units in 1st quarter 2024. That was about 20% ahead of a typical annual absorption rate from the 2010s decade.

On a market level, 2024’s 1st quarter demand surge was most pronounced in Seattle, Dallas, Austin and Las Vegas. Seattle and Dallas saw 1st quarter absorption top 4th quarter’s pace by about 3,600 units, while the quarterly upturn was about 3,100 units in Austin and more than 2,500 units in Las Vegas. While most of those are Sun Belt markets that have seen notable job growth that is expected to continue in the near term, all have seen sizable supply volumes recently.

On the other hand, big gateway markets New York, Newark and Los Angeles saw demand volumes fall significantly between 4th quarter 2023 and 1st quarter 2024. Of those, only Newark saw positive demand in 1st quarter, for a mild 780 units.