Economists' Outlook

Housing stats and analysis from NAR's research experts.

Apartment Supply Outpaces Demand in Q1.2017

Economic activity slowed in the first quarter of 2017, despite a milder-than-usual winter. Based on the second estimate of real gross domestic product (GDP) from the Bureau of Economic Analysis (BEA), the United States economy rose at an annual rate of 1.2 percent.

Payroll employment advanced in the first quarter of 2017, with a net gain of 527,000 new jobs, according to the Bureau of Labor Statistics (BLS). Private service-providing industries continued as the growth engine during the quarter, with 341,000 net new jobs.

The unemployment rate remained flat at 4.7 percent compared with the last quarter of 2016, based on data from the BLS. However, on a monthly basis, the unemployment rate declined with each successive month from 4.8 percent in January 2017 to 4.5 percent in March.


In the wake of employment gains, consumer confidence strengthened. The Conference Board’s Consumer Confidence index advanced 22.4 percent year-over-year, to 117.5, the highest value since the fourth quarter of 2000. The value for April 2017 was 120.3, indicating growing optimism about the 2017 outlook.

The improvements in the employment landscape have been leading to rising household formation, and solid demand for multifamily properties. Net absorption of multifamily units totaled 30,500 in the first quarter of 2017, according to CBRE. In tandem with rising demand, development of multifamily properties also advanced, with 44,600 units delivered to market during the quarter. The national vacancy rate averaged 4.9 percent, flat compared with the prior quarter, but 20 basis points higher from the same period in 2016. With increasing supply and rising vacancies, rent growth was unchanged, posting an annualized 4.1 percent growth rate.


Commercial fundamentals in small cap commercial markets remained positive during the first quarter of 2017, but the pace of growth moderated. Leasing volume advanced 2.3 percent from the prior quarter. New construction rose by 2.3 percent from the prior quarter, the slowest pace since the first quarter of 2015. Leasing rates rose by 3.8 percent, as concessions declined 11.1 percent.

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To access the Commercial Real Estate Outlook: 2017.Q2 report visit