The average U.S. asking rent increased by $4 in November to a record-high $1,590, reported Yardi Matrix. However, while multifamily rents rose last month, it was only a slight increase as the anticipated deceleration in growth starts to take hold.
“Coming out of the worst of the pandemic, the multifamily market experienced eight straight months of exceptionally high rent growth, with the average U.S. multifamily asking rent rising about $180 between March and October. A slowdown is inevitable, and it started in November,” according to Yardi Matrix analysts.
Even with the anticipated slowdown, the multifamily market remains healthy. The average occupancy rate for stabilized properties was over 96% in October, a 1.4% year-over-year increase. According to Yardi Matrix, nearly 590,000 units were absorbed over the 12 months through October, and economic conditions are poised for continued steady demand.
Asking rents nationally were up 13.5% year over year in November, a slight increase from October. While metros in the Southeast and the Sun Belt have consistently experienced strong rent growth, double-digit gains are being seen across the nation. Out of Yardi Matrix’s top 30 markets, 25 saw rent growth of 10% or more year over year through November, while Washington, D.C., came in just shy at 9.9%. The bottom two metros with the weakest increases were the Twin Cities at 5.6% and San Francisco at 5.4%.
On a year-over-year basis, rent growth in luxury lifestyle properties has outstripped renter-by-necessity properties. Lifestyle property asking rents increased 15.8% nationally year over year in November, while renter-by-necessity properties only saw a 10.9% boost.
On a month-over-month basis, only two of Yardi Matrix’s top 30 metros—Raleigh, North Carolina, and Miami—saw asking rent growth of 1%. A dozen metros saw rents decline, with Seattle (-0.8%) and San Jose, California, San Francisco, and Denver (-0.9%) as the worst performers last month. In addition, lifestyle properties only saw a 0.1% month-over-month increase in November, behind renter-by-necessity properties at 0.4%.
The single-family rental market continues to be hot, outperforming multifamily with year-over-year asking rent growth up 14.3% in November. Occupancy rates for this sector also increased 0.6% nationally year over year through October. The top performing metros included Miami with a 40.5% year-over-year increase, Tampa, Florida, at 38.2%, and Phoenix at 23.9%. Kansas City, Missouri; Seattle; and San Antonio experienced the smallest increases at 6.4%, 6.5%, and 6.8%, respectively.
