The multifamily construction boom is helping to soften rent growth, according to new data from Zillow. With more new multifamily units completed in June than in any month since the 1970s—nearly 60,000—more property managers offered concessions to renters in July as rent growth slowed.
The share of listings on Zillow offering a concession, such as free weeks of rent or parking, increased to 33.2% last month. This is up slightly from 33% in June and 25.4% in July 2023. The share is significantly higher than July 2022, when concessions were at a 20-month low at 19.4%.
Rents are still rising, up 5.1% since July 2022 but more in pace with historic norms. Monthly rent growth slowed in July for the second straight month. In addition, the vacancy rate held steady in the second quarter at 6.6%, where it has remained for the past four quarterly readings.
“Builders have stepped up and built an incredible number of homes in response to soaring rents during the pandemic, and renters are now seeing the benefits,” said chief economist Skylar Olsen. “Now is a great time for renters to find a deal, with more new apartments hitting the market than at any time in the past several decades. Rents are still growing, but it’s a far cry from the steep rent hikes of two or three years ago, and renters will find sweeteners being offered by more than half of rentals in some places. A slowing job market and lower mortgage rates could mean falling rents if the current trends hold.”
According to Zillow, over half of the rental listings offering a concession are in six major metros, many with an increased amount of supply coming online:
- Raleigh, North Carolina, 53.3%;
- Charlotte, North Carolina, 53%;
- Atlanta, 52.2%;
- Salt Lake City, 50.9%;
- Nashville, Tennessee, 50.8%; and
- Austin, Texas, 50.5%.
In addition, Zillow highlighted four major metros that have a smaller share of listings with a concession compared with 2023, which indicates a more competitive rental market. These markets include San Jose, California; Baltimore; Milwaukee; and Pittsburgh.
