Multifamily rents cooled in August due to seasonality and rising uncertainty about consumers’ financial health. The average advertised rent decreased $1 to $1,755, according to Yardi Matrix’s National Multifamily Report. Year-over-year growth was unchanged at 0.7%.
“Rent growth is expected to remain lackluster through year-end. Momentum is slowing across most metros, as only a few markets recorded more than 3% year-over-year growth,” noted the report. “This deceleration is driven by supply rather than demand, as elevated deliveries have created a highly competitive leasing environment amid record absorption. However, supply pressures are beginning to ease, with most metros past their peak supply and new starts declining sharply due to the cost of construction and tighter financing.”
In August, Midwest and Northeast markets saw the highest year-over-year rent growth. Chicago led the way with 4% annual growth, followed by Columbus, Ohio, 3.3%; Minnesota’s Twin Cities, 3.2%; and New York, 3%. Negative rent growth continued to be seen in many Sun Belt and Mountain West metros, with Austin, Texas, at -4.5%; Denver, -3.8%; and Phoenix, -2.8%.
Both lifestyle and renter-by-necessity rents were down month over month in August. Similar to year over year, Midwest and Northeast markets were at the top for rent gains. Philadelphia led with a 0.7% increase. Other top performers included Kansas City, Missouri, at 0.5%; the Twin Cities, 0.4%; and Indianapolis, 0.3%
In the Sun Belt, some rebounds are being seen. Atlanta, and Charlotte, North Carolina, posted 0.3% month-over-month gains. Raleigh, North Carolina, was up 0.1%. However, month-over-month rents fell in several Midwest and Northeast markets, including Detroit, -0.6%; San Francisco and New York, both -0.4%; and Washington, D.C., and Columbus, both -0.3%
On the single-family rental side, advertised rents remained flat in August at $2,208, with year-over-year growth up 0.6%.
Rent growth is at least 5% year over year in the Midwest markets of Chicago, Kansas City, the Twin Cities, and Columbus; however, it remains negative in the high-supply markets of Austin, Denver, Raleigh, and Tampa.
“Institutional landlords face rising competition from ‘accidental landlords,’ or homeowners who choose to rent rather than sell amid high mortgage rates and weak demand,” noted the report. “Yet rent growth has held relatively steady in these markets, despite growing competition.”
