There wasn’t much movement in February with respect to average U.S. monthly rents. The metric held steady at $1,306 last month, according to Yardi Matrix’s monthly survey of 124 markets.

On a year-over-year (YOY) basis, rents were up 2.8% nationwide in February, down 40 basis points from January and roughly half the 5.5% growth rate of a year ago. Despite some fluctuation in between, rents are the same as they were in July 2016.

Sacramento, Calif., topped the ranking of metros once again, with a 9.7% YOY increase last month. Most of the largest U.S. metros, though, are reverting to modest growth levels, according to the report.

Rent growth was between 2% and 5% YOY in 20 of the top 30 metros, and California dominated both the top and bottom of the list. The state claimed four of the top six metros, with Sacramento joined by the Inland Empire (third, at 6.5%), Los Angeles (fifth, at 4.7%), and San Diego (sixth, at 4.6%).

Near the bottom of the list are San Jose (-1.1%) and San Francisco (0.2%), which have flattened after a long stretch of high growth, due largely to affordability issues. Houston remains last, at -2.1%, though with energy prices stabilizing and job growth starting to pick up, the market has likely seen its bottom.

Yardi stresses that these results aren’t unexpected or a sign of long-term weakness in the sector. “Household formation should remain robust in 2017,” the report states, “and although new supply might overshoot demand in the short term, we expect occupancy rates to remain close to all-time highs.

“The key to multifamily fundamentals this year will be the performance of the economy. Even if the market does not live up to the financial sector’s elevated expectations or the high-growth agenda takes longer to have an impact, at a minimum the economy should continue to grow moderately, which is still a good scenario for commercial real estate.”

Although rent-growth deceleration and a decline in occupancy continue, the overall state of the multifamily market remains strong, Yardi says. Apartment fundamentals have returned to normal levels, thanks to a glut of new supply and a moderating employment market.

Yardi’s data show that new supply is concentrated in a small subset of secondary markets, mainly located in the South and West. The Charlotte, N.C., metro, for example, will increase its housing stock 6.3% in 2017, along with other popular metros, such as Seattle (4.9%); Austin, Texas (4.8%); and Miami (4.7%). Rents decelerated in each of these metros throughout 2016, and the trend is likely to continue through the remainder of 2017, as new supply significantly outpaces job growth. However, each metro is seen as attractive to millennials and business development, so the short-term softness should give way to long-term strength.

Also flat was the national occupancy rate for stabilized properties. It was unchanged, at 95.2%, in January. Occupancy has trended downward since its 12-month high in March 2016 as new supply has been absorbed, according to Yardi. While national occupancy rates have dropped roughly 50 basis points over the past 12 months, occupancy rates in high-construction markets such as Denver and Houston have fallen more than 1.0%.

Most new units have been added at the high end. As a result, renter-by-necessity (RBN) occupancy outpaces lifestyle occupancy by 50 basis points.

To view the full report, click here.