Freddie Mac has projected that housing supply shortage will boost the rental market and multifamilly volume growth this year.
The rental market will rise 4% for the whole year due to high vacancy rates, according to Freddie Mac's Multifamily 2019 Midyear Outlook.
“A strong labor market and a persistent housing shortage have continued to fuel a robust rental market,” said Steve Guggenmos, who leads Freddie Mac Multifamily’s research and modeling team. “As of June, multifamily completions outpaced the prior two years, but demand remains high in the majority of markets, allowing them to absorb most of the new supply. These strong fundamentals and lower-than-anticipated interest rates have supported growth in multifamily originations, which are forecasted to grow to $336 billion in 2019.”
Despite the increased multifamily construction, housing supply continued to fall short due to a surge in demand. The Census Bureau recorded more than five multifamily units nearing completion this year, up to 365,000 units annualized as of June. A year ago, the bureau reported 345,000 units.
With the robust growth, Freddie Mac anticipated multifamily originations to climb 9.1% to $311 billion. The GSE also predicted a strong volume growth of 8% or $336 billion, if interest rates stay at an average 2.2% for the rest of 2019.
Freddie Mac Multifamily has securitized mortgages on apartment buildings in the US, 90% of which support rental units for low- and median-earning households.