Analysts pinpoint the drivers
The multifamily housing market kicked off 2024 on a stable footing, even as some areas grapple with an influx of new supply, the latest Yardi Matrix National Multifamily Report revealed.
January saw the average asking rent hold steady at $1,710, marking a modest 0.5% increase from the previous year. However, occupancy rates experienced a slight dip, falling 50 basis points from the year prior to 94.6% in December.
Regions such as the Northeast and Midwest continued to see high rent growth.
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The report suggests that rent growth will face challenges in 2024 due to an anticipated surge in supply. Yardi Matrix projected a record 540,000 units delivered this year, followed by another 460,000 units in 2025.
“Another year of weak growth is expected in 2024 largely due to the rapid increase in deliveries that stems from the sector’s strong performance, high liquidity, and favorable treatment in the 2017 tax bill,” Matrix analysts noted in the report. “New supply, however, is not spread evenly.”
The distribution of new supply varied across the country, with the highest concentrations in rapidly growing tertiary and secondary markets, particularly in the Sunbelt and Western regions. In these areas, rent growth is expected to remain sluggish. Conversely, limited new supply in the Northeast and Midwest should support continued rent increases.
By comparison, single-family rentals showed stronger performance than multifamily units last month. The average rent for single-family rentals edged up by $2 to $2,130 in January, a 1.5% increase year-over-year. The occupancy rate for single-family rentals in December was 95.7%, reflecting a 10-basis point improvement from the previous year and signaling sustained demand in this segment.
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