"Market may be coming to the end of its extraordinary run"
Annual rent growth fell more than a full percentage point for the third consecutive month, reflecting the impact of rising interest rates and a slowing economy.
The average national asking rent flattened in September at $1,718, according to a new report from Yardi Matrix. That comes after rents rose more than 20% since January 2021. Year-over-year, multifamily rent growth decelerated 150 basis points to 9.4% - the first time it had slid below 10% since July 2021.
“The cooling economy is beginning to show its effect on multifamily,” Yardi said in the report. “However, key fundamentals remain strong. Despite the flattening rent growth, much about the market remains positive. National asking rents are still at record highs, and national occupancy rates have been hanging around 96% since June of 2021.”
National lease renewals increased 60 basis points in August to 59.1%, the first gain since February. On a year-over-year basis, renewal rents rose 10.8% in August, up 50 basis points from July. Multifamily absorption through August also returned to pre-pandemic levels at 223,000.
“The outlook for multifamily remains strong, although the market may be coming to the end of its extraordinary run of rent growth. Demand is slowing as migration, and household formation drops to normal levels,” the report says.