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After historic highs in 2022, multifamily rents ended the year with a drop, according to the latest Yardi Matrix Multifamily Report. U.S. asking rents saw a $4 decrease last month to $1,715, while growth decreased by 80 basis points year over year to 6.2%, the lowest level since May 2021.

All of Yardi Matrix’s top 30 metros experienced positive rent growth year over year. Indianapolis held the top spot, seeing an 11.4% increase, followed by San Jose, California, with a 9% jump; Kansas City, Missouri, with an 8.3% increase; and Florida’s Miami and Orlando recording 8.1% and 8% bumps, respectively.

Month over month, rents only increased in New York, 0.9%; Indianapolis, 0.2%; and Houston, 0.1%. According to Yardi Matrix, Boston saw the biggest monthly drop at -1.1%, although rents rose 5.7% in the market for the year. Raleigh, North Carolina, and California’s Inland Empire also saw 0.9% month-over-month decreases in December.

“With a variety of concerns about the economy and affordability, we expect rent growth in 2023 will be closer to typical levels,” stated the report.

Yardi Matrix is predicting that asking rents will remain flat or fall slightly through the typically strong spring and then will likely rise moderately—but not to the record highs seen over the past two years.

Renewal rates were still strong nationally in the fall, with an 11.8% year-over-year increase through October. Yardi Matrix explained that this growth reflects owners continuing the process of bringing rents for existing residents closer to asking rents. National lease renewal rates have settled into a range near 65%, with October seeing 64.9%, down slightly from September, and the peak hitting in 2021’s fourth quarter.

“October’s renewal rate growth is likely at or near its apex, since asking rents have been negative since November,” stated the report.

The report noted that the single-family rental (SFR) sector also is slowing. National asking rents for single-family rentals fell for a second straight month, down $8 in December to $2,083. SFR asking rents have fallen $12 over the last two months as housing demand starts to weaken. Occupancy rates also decreased 1.4% year over year through November but were unchanged from October at 95.8%.

“Rising mortgage rates are impacting the SFR sector as the number of home sales has dropped,” noted the report. “In some cases, owners are giving up trying to sell and turning homes into rentals, which increases the amount of competitive stock for SFRs.”