Multifamily rent growth continues to remain strong, outpacing every year other than 2021, according to the latest Yardi Matrix Multifamily Report. The average U.S. asking rate rose $19 in May to an all-time high of $1,680. Asking rents have increased $70 year to date nationally. Year-over-year growth declined by 40 basis points to 13.9%—130 basis points off last summer’s peak.
“Decelerating economic growth and concerns about gas prices and inflation have not eroded multifamily demand much nor slowed down the upward climb of rents,” stated Yardi Matrix analysts in the report.
Out of the Yardi Matrix top 30 metros, only one saw year-over-year rent growth below 8.7%—Minnesota’s Twin Cities at 5.2%. The biggest gains seen were in Florida, with Miami, Orlando, and Tampa all seeing year-over-year growth above 20%.
However, demand appears to be cooling slightly in Sun Belt and Western markets, while the gateway markets continue to recover. Occupancy rates in San Jose, California; New York; Chicago; and San Francisco increased at least 1.5 percentage points over the past year.
“Signs of the inevitable cooling may well come from the weakening occupancy rates in some high growth markets,” stated Yardi Matrix.
Seven metros have seen occupancy rates decrease over the past year, topped by Las Vegas’ at -1.1%. It was followed by Sacramento, California, and Phoenix at -0.7%. According to Yardi Matrix, a robust delivery pipeline could be the cause in some metros, but new supply in others has been on par with the national average.
Month over month, asking rents increased 1.1% in May, 20 basis points higher than the prior month. Last month’s gains were led by metros on the West Coast, with San Jose seeing a 2.2% increase, followed by California’s Inland Empire at 2.1% and Seattle at 2%. The lowest month-over-month increases were in Phoenix and New York at 0.1% and Boston at 0.3%.
Rents for single-family rentals also remained strong in May, rising 12.7% year over year. Three metros experienced growth over 20%: Orlando at 49.5%, Miami at 28%, and Toledo, Ohio, at 21.5%. Nationally, occupancy rates decreased 20 basis points.
“Homeownership continues to be further out of reach for many potential buyers, while others are losing bids to the intensifying competition from institutional investors, increasing the demand for single-family rentals,” stated the report.