Apartment supply is at a historic level following a large delivery of completions in 2023. Supply hit a 36-year high, according to RealPage Analytics, with 440,000 units completed last year. However, completions are expected to decline following this year due to the drop in starts.
Supply and demand are directly related here in the Sun Belt and Mountain regions. The two regions combined for 62% of the new supply and 70% of the nation's demand. Meanwhile, the West was lagging at only 10% of the new units with 4% of the new demand.
Net absorption was also above traditional trends, totaling more than 58,000 units in the fourth quarter of 2023, when the average since 2000 during the quarter is negative 11,000 units. This was the best-performing fourth quarter in 25 years behind only 2020 and 2021.
Apartment occupancy slipped by 80 basis points year-over-year to 94.1%, which is still in line with the 20-year average but far off the peaks in 2021 and 2022.