Multifamily

23Q3
Houston

The Houston multifamily market stabilized during the third

quarter as overall occupancy rates and rental rates remained
relatively unchanged from the previous quarter and the past year.
Investment activity continued to feel the impacts of the global
economic headwinds, with sales volume dropping to a 10-year
low.
The cost of capital continues to be the main driver hindering
investment activity with scant clarity on the direction of interest
rates in the near future or next year.
Danny Rice | President

Accelerating success.
 Multifamily Key Takeaways

Houston
23Q3
• Net absorption stabilized overall from the previous quarter
• Average rents dipped slightly
• Occupancy was constant in third quarter
• Overall sales volume declines but price per unit is up

YOY YOY Under YOY Overall Class A YOY

Occupancy Rate Net Absorption Construction Effective Monthly Rent
89.2% FORECAST
3.0K Units FORECAST
21.7K Units FORECAST
$1,756 FORECAST

Houston Highlights
Demand for multifamily housing remained strong during the third quarter. Overall demand collectively matched the previous
quarter while Class A properties reported positive absorption of 4,299 units, a 13.2% decline from the previous quarter. The
average monthly effective rent for multifamily units dipped marginally to $1,277 per month in Q3 2023 from $1,282 per month
in Q2 2023. The construction pipeline increased slightly to 21,711 units under construction from the previous quarter but this
represents a 23.9% increase year-over-year. The number of proposed units rose to 31,719 units. Occupancy stabilized at 89.2%,
maintaining the previous quarter’s rate while 3,502 units delivered.

Market Indicators Market Fundamentals

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22Q3 23Q2 23Q3
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Total Inventory
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New Supply
3,107 6,384 3,504
(Units Delivered)

Demand Monthly Rent Occupancy

269 3,023 3,026
(Units Absorbed)

Occupancy 90.8% 89.2% 89.2%

Houston’s overall occupancy rate decreased 160 basis points to
Under 89.2% year-over-year but has remained constant the last two
17,599 20,473 21,711 quarters. The average effective rent dropped slightly from the
Construction (Units)
previous quarter but showed a 1.0% increase year-over-year.
Average Monthly Rent
$1,264 $1,282 $1,277 Source: MRI ApartmentData
(Asking)

Colliers’ Transactions/Assignments

Under Contract Listing Listing

Clear Lake Apartment Homes | 244 Units Oak Bend Place | 152 Units Deer Springs | 128 Units
Clear Lake Tomball Humble
Houston
Multifamily

23Q3
Sales Volume & Pricing
In Q3 2023, Houston’s multifamily investment sales volume
fell to $453 million, a decade low on an adjusted, quarter-over-
quarter basis. The rolling four-quarter sales volume dropped
to $3.8 billion during the third quarter, representing a sharp
drop from the $18.4 billion recorded year-over-year.
Houston Sales Volume ($)
Cap Rates
Houston’s multifamily median cap rate fell by 20 basis
points to 5.4% in Q3 2023, while Texas and U.S. median
cap rates also fell slightly from 5.2% to 5.0% and from
5.4% to 5.3%, respectively. However, on an annual basis,
Houston’s median cap rate rose from 4.7% to 5.4%, while
median cap rates also increased from 4.3% and 5.0% in
Texas and from 4.6% to 5.3% in the U.S. year-over-year.

Rolling 4-Quarter Volume Quarterly Volume

$25
Median Cap Rate
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U.S. Texas Houston

$20

6.00%

$15

5.50%
$10

5.00%
$5

$0 4.50%

4.00%

Source: MSCI Real Capital Analytics

Source: MSCI Real Capital Analytics

Houston’s median sales price per unit increased 17.6% to
$124,071 from the previous quarter’s $105,521 and is up 1.0%
year-over-year. However, the Q3 2023 Texas median price per
unit fell by 6.9% year-over-year. Meanwhile, the U.S. median
sales price per unit declined at less than half that rate, posting
only a 3.2% drop since Q3 2022.

Median Price per Unit

U.S. Texas Houston
$200,000

$180,000

$160,000

$140,000

$120,000

$100,000

$80,000

Source: MSCI Real Capital

Colliers | Houston | 23Q3 | Multifamily Report

 Houston | 23Q3 | Multifamily | Market Statistics

Avg Monthly Current Previous Current Previous

Rent per Absorption Absorption Occupancy Occupancy
Houston # of Units Unit # of Units # of Units Rate (%) Rate (%)
Class A 198,235 $1,756 4,299 4,952 84.9% 84.2%

Class B 276,613 $1,264 (1,047) (223) 91.7% 92.1%

Class C 207,277 $980 (306) (1,552) 89.9% 90.0%

Class D 58,305 $762 80 (154) 89.6% 89.4%

Total Market 740,430 $1,277 3,026 3,023 89.2% 89.2%

Source: MRI ApartmentData

Houston Multifamily Construction Activity

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The Northwest sector boasts 48.9% of all units under construction and 52.6% of units opened this year. The Central Houston
submarket tops the proposed list with 29.5% of the proposed 31,719 units followed by the Northwest at 23.0%.

FOR MORE INFORMATION

Chip Nash Bob Heard Patsy Fretwell
Executive Vice President Executive Vice President Research Director
Multifamily Investment Properties Multifamily Investment Properties Houston
+1 713 830 2170 +1 713 830 2172 +1 713 830 2125
chip.nash@colliers.com bob.heard@colliers.com patsy.fretwell@colliers.com

Jaleel Adatia William Uhalt

Senior Associate Research Manager
Multifamily Investment Properties Houston
+1 713 830 2259 +1 713 830 2137
jaleel.adatia@colliers.com william.uhalt@colliers.com

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