Houston Multifamily Market Report
Market Overview
A strong surge in the demand for Houston multifamily properties was able to narrow the supply-demand mismatch, which was caused by last year’s multi-decade high of new supply. 19,000 units were absorbed over the last 12 months, a 10% increase from the 2015-2019 annual average, versus the 23,000 units that were delivered. While the pace of development remains stable, with 2.1% of inventory underway, Houston regularly leads the country in deliveries.
The forefront of construction activity in Houston are the fast-growing suburban areas, along with a densifying urban core. While supply pressure in Houston has peaked, there are still 15,000 units under construction, with roughly half of them expected to be completed during the next four quarters. This will aid in keeping vacancies high and rent growth flat in the short term. However, the dramatic drop in construction starts in recent quarters has paved the way for a possible resurgence by late 2025. Current predictions show less than 9,000 units completed in 2025, the lowest level since 2018.
Houston By the Numbers
- Sales Volume: $1.1B
- Vacancy Rate: 11.3%
- Deliveries in SF: 24,187
- Absorption in SF: 19,684
- Rent Growth: 0.3% | Last 12 Months | Source: CoStar Group
Market Performance
The latest projections show new supply at roughly 19,000 units this year. This is only a slight decrease from last year’s multidecade high of 25,000 units. Demand has been mostly driven by new inventory absorption, which explains why supply-heavy areas like Bear Creek/Copperfield and Cinco Ranch have had some of the highest absorption rates over the last year. Annually, rents have shifted by 0.3%. Nonetheless, the market outperforms its Texas Triangle neighbors, Austin, Dallas-Fort Worth, and San Antonio.
As of the fourth quarter of 2024, there are 18,000 units in production. The Class A segments continue to see the most development activity. While the pipeline is heavy, it is significantly lower than the market’s five-year average of 31,000 units. Long-term, buyers remain positive about Houston’s multifamily market. Houston, the fourth most populous city in the United States, should continue to attract students to its 14 major colleges and universities, young professionals to the energy sector and rapidly growing healthcare and biomedical research sectors, and families given that it is more affordable than Dallas-Fort Worth and Austin.
