- Occupancy up quarter over quarter and annually
- Absorption increased quarterly and annually
- Average rents rose over the year and over the quarter
- Supply decreased over the quarter
The Houston-The Woodlands-Sugar Land, TX MSA population is 7.2 million which has grown 7.5% over the last five years. The population is forecasted to grow 7.6% between 2020 and 2025. Job growth is positive increasing by 4.8% between June 2020 and June 2021. The unemployment rate is low at 6.6%. Houston’s single family home sales increased 13.6% year over year, pushing home prices to record levels. This in turn has boosted the multifamily market, pushing occupancy from 88.4% in Q2 2020 to 90.7% in Q2 2021. The average monthly rent for multifamily units increased from $1,047 to $1,116 per month, a 7% annual increase. Demand tripled between quarters, with over 15,800 units absorbed in Q2 compared to almost 4,800 in Q1. There are over 16,000 units under construction and another 28,000 units are proposed.
Houston’s overall occupancy rate increased 190 basis points over the quarter. The average monthly rent rose from $1,041 to $1,056.
Pricing & Sales Volume
Houston’s multifamily investment sales volume increased 18.4% over the quarter between Q1 2021 and Q2 2021 according to our data provider, Real Capital Analytics. When comparing Houston to the U.S., the national quarterly volume increase of 29% was significantly greater than Houston’s quarterly sales volume.
Houston’s median sales price per unit increased by 1.4% over the quarter from $98,101 to $99,448. The U.S. median price per unit increased by 9.7% over the quarter from $142,905 in Q1 2021 to $156,717 in Q2 2021. Houston’s average price per unit is significantly higher at $130,284..
Median Price per Unit
Houston Sales Volume ($)
Houston’s multifamily cap rates increased 10 basis points from 5.3% to 5.4% over the quarter and increased over the year by 60 basis points. In comparison, the median U.S. cap rate decreased to 4.9% from 5.0% over the quarter and dropped 40 basis points to 4.9% over the year. Houston’s average cap rate remained at 5.1% over the quarter.