Apartment rent growth remained near stagnant in January, inching up 0.3% year over year in January, according to recent data from RealPage.
This is in line with December’s reading, indicating that the deceleration of rent change may have leveled off. However, reacceleration is not likely, with RealPage expecting rent growth to remain fairly flat throughout this year and many markets to post cuts.
“Tepid rent growth at the start of 2024 may seem counterintuitive considering the resurgence of apartment demand over the past 12 months,” said Carl Whitaker, senior director of research and analysis at RealPage. “But it’s important to remember that supply also increased substantially during that same window. In fact, the volume of new supply outpaced absorption, and that trend will likely persist throughout 2024. As such, rent growth should continue to face downward pressure as a result of new apartment deliveries.”
Data from RealPage Market Analytics finds that nearly 440,000 units were delivered in the nation’s 150 largest markets last year, boosting inventory by 2.3%. Nearly 234,000 were absorbed in 2023, which RealPage says is a healthy rate of demand; however, it failed to meet the levels of new supply. Month-over-month occupancy remained unchanged in January at 94.1%, a 10-year low.
Even more supply is set to deliver this year. With nearly 962,000 units under construction at the end of the year, RealPage expects 672,000 of those to come online in 2024. With multifamily permits and starts ending 2023 below their 2022 levels, multifamily supply is expected to peak this year and then taper off, noted RealPage.
Rent changes varied across the nation’s top 50 apartment markets, with high-supply markets seeing the deepest cuts. Austin, Texas, which added over 17,000 units to its multifamily stock last year, topped the list of year-over-year rent growth laggards in January at -6.4%. Other high-supply markets with deep cuts included Atlanta; Phoenix; Salt Lake City; Raleigh-Durham, North Carolina; Nashville, Tennessee; and Charlotte, North Carolina.
On the other end, moderate rent growth was seen year over year in several Midwest markets in January. Cincinnati tops the growth list at 3.6%.
“Markets that continue to post annual rent growth above 2% have become more of the exception than the norm,” added Whitaker. “In fact, just 13 of the nation’s 50 largest metro areas saw same-store rents expand by more than 2% in the year-ending January. These markets are overwhelmingly clustered in Midwestern U.S., such as Cincinnati; Chicago; Milwaukee; Indianapolis; Cleveland; and Kansas City, Missouri.”
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