Strong demand has been largely keeping up with the nation’s rapid supply growth, with Yardi Matrix calling multifamily performance for the first half of the year “encouraging.”
According to the latest Yardi Matrix National Multifamily Report, advertised rents increased 1.5% nationally in the first half of the year and 1% in the second quarter. While lower than the five years prior to the pandemic, when advertised rent growth averaged 2.5% for the first half and 1.7% in the second quarter, as well as during the post-pandemic boom years, “a moderately positive result is a win,” noted the report.
“Demand has cooled from the 600,000-plus units absorbed in 2021, but the market is on track to absorb more than 300,000 units again in 2024, which is a healthy amount,” said Yardi Matrix. “The U.S. job engine keeps chugging along, and demand is boosted by the U.S. housing shortage, foreign immigration, and the low number of home sales, which keeps in place some renters who would prefer to buy homes but cannot.”
The average U.S. advertised rent increased $4 to $1,739 in June. The year-over-year growth rate decreased slightly to 0.6%.
Year-over-year rent growth continued to be highest in the Northeast and Midwest, with New York City leading the way at 4.8% growth year over year, followed by Kansas City, Missouri, at 3.4%; Columbus, Ohio, at 3.2%; New Jersey at 3.1%; and Washington, D.C., at 3%.
According to Yardi Matrix, negative year-over-year rent growth was intensifying again in the Sun Belt, led by Austin, Texas, at -6.5%. Atlanta and Raleigh, North Carolina, followed at -3.6% and -3.3%, respectively.
In May, the national occupancy rate remained at 94.5%, where it has been since the start of the year. This is down 0.5% year over year. Las Vegas was the only metro to see a year-over-year increase of 0.4% to 93.3%. Yardi Matrix noted that despite posting strong rent growth, Indianapolis and Kansas City saw decreasing occupancy rates, which is a possible indication that rent growth may be cooling in these markets.
Month over month, 21 metros posted modest rent gains. Rents were up 0.3% in the renter-by-necessity segment and 0.2% in the luxury lifestyle segment. New York City also led the month-over-month rent gains at 1.1%, followed by Chicago, Kansas City, and Portland, Oregon, all at 0.9%. Eight metros posted modest declines, with Austin down 0.8%.
On the single-family rental (SFR) side, advertised rents decreased $3 in June to $2,166, with year-over-year growth dropping 30 basis points to 1.1%. SFR occupancy rates were unchanged at 95.4% in May.
“The average national advertised rent for SFR properties fell slightly in June, the first drop since late 2023,” noted the report. “However, rents are only $3 from their all-time high, and the sector is outperforming multifamily, with rents up 1.1% year over year.”
Boston and Lansing, Michigan, experienced the highest year-over-year growth in June, while Phoenix and Baltimore came in at the bottom of the list.