After several months of deceleration, the anticipated pullback in rents started in November
Multifamily demand started to deteriorate in November as national rent growth tumbled from its record highs in 2021, data from the Yardi Matrix National Multifamily Report has revealed.
US asking rents slid to $1,719 last month, a $9 rollback from last year’s levels and the largest one-month decline since the global financial crisis. The report attributed the decrease to economic headwinds and weaker consumer sentiment that led to waning demand.
“The deterioration in rents was not unexpected, nor is it necessarily a sign of a deep recession,” Yardi Matrix noted in the report. “Rent increases have far exceeded normal growth patterns for nearly two years. Average asking rents increased by 22% nationally between January 2021 and October 2022, a rate that would be unsustainable under optimal conditions. However, the decades-high inflation rate has left household balance sheets in a weaker position than a year ago, while economic growth is slowing as the Federal Reserve raises interest rates.”
While the average asking rent rose 6.4% in November to $1,224, it was nearly 30% below the $1,719 national average. Occupancy rates also declined, slipping 60 basis points year-over-year to 95.6%.
The slowdown in the single-family rental market has also started, with the average asking rent dropping $5 in November to $2,091. Year over year, single-family rent growth fell by 80 basis points to 5.9%.
“Rising interest rates continue to be a big story in the SFR segment, as the drop in home sales impacts when and where people move,” Yardi Matrix wrote.
