Houston Multifamily Report – July 2023
Despite the overall slowdown, the city's rentals prove resilient.
Houston showcased stable fundamentals during the first half of 2023, with rents remaining in growth mode even during the leasing off-season, albeit at a slower pace. The average asking rate rose 0.2 percent on a trailing three-month basis through May, to $1,344, well behind the $1,716 U.S. figure. The occupancy rate in stabilized properties declined by 80 basis points in the 12 months ending in April, to 93.2 percent.
Houston unemployment (4.0 percent) was higher than the national rate (3.4 percent) as of April, but yearly job growth outperformed the U.S., closing the gap. The metro’s job market expanded by 4.6 percent, adding 142,000 jobs in the 12 months ending in March, well ahead of the 3.1 percent national rate. All sectors grew, with professional and business services and trade, transportation and utilities in the lead, accounting for almost 40 percent of growth. Houston’s life sciences sector is expanding, fueling growth in professional and business services. Trade, transportation and utilities is also on an upward path. The metro led the U.S. in exports in 2022 and is expected to hold its position in 2023.
Deliveries and construction starts softened, with just 2,514 units coming online and 2,250 breaking ground in 2023 through May. However, the pipeline was still robust, with 31,655 units under construction. Meanwhile, investment activity dwindled, reaching a total of $713 million in five months. The price per unit dropped below $100,000 for the first time since 2017, to $93,806.