The statistics and in-depth market perspective contained in the report illustrate current multifamily trends.
Sales volume totaled $13.9 billion in 2Q20, representing a 70.4% year-over-year decline compared with 2Q19. While transactions slowed considerably as a result of the COVID-19 pandemic, multifamily has been the top recipient of capital year-to-date. Sales volume averaged $4.6 billion per month in 2Q20, the lowest monthly average since 2Q11.
Multifamily has been the top performing property type for rent collections since the onset of COVID-19 and the only property type to exceed 90% rent collections each month since April. Rent collections fared best in 2Q20 in lower-cost, higher growth non-major markets such as Austin, Denver, Sacramento, Salt Lake City and San Diego.
Annual total returns for multifamily decreased to 2.98% in 2Q20 as appreciation was negative for the first time since 2009. The income component of total returns remains durable at 4.23%, just 6 basis points below 2019 levels. Performance in the Southeast has outpaced the broader US multifamily total returns index on a short and long-term basis.
Over the past 12 months, annual effective rent growth fell to 2.1%, caused by a 150 basis point drop in 2Q20 compared with 1Q20. On a quarterly basis, rent growth dropped to -1.0% due to COVID-19. Rental growth over the past 12 months remains strongest in Sunbelt markets lead by Phoenix at 6.7%.
Over the past 12 months, 303,650 units were delivered nationally compared to 177,007 units absorbed. The largest markets in Texas (Austin, Dallas, Houston and San Antonio) account for 17.9% of deliveries nationally over the past year.
Total mortgage debt outstanding for the multifamily sector rose to $1.6 billion for the quarter, an increase of 1.8% quarter-over-quarter. Total originations by Fannie Mae and Freddie Mac rose to $39.8 billion in 2Q20 as the market stabilized, in part, due to Federal Reserve policy.