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The average U.S. asking rent declined slightly, for the second straight month, in October, down $3 to $1,718, according to the latest Yardi Matrix Multifamily Report.

Year-over-year growth moderated at 0.4%, down from 0.8% in September and 6.5% from December 2022. The national occupancy rate inched down to 94.9%, the first decline in four months. Occupancy was either down or unchanged year over year in September in all but four markets—Chicago, Denver, New York, and Seattle.

The modest positive growth in metros in the Northeast and Midwest was offset by modest negative growth in the Sun Belt and West. Rent growth turned negative in 14 of Yardi Matrix’s top 30 metros, with most of these markets, particularly in the Sun Belt, being impacted by the recent influx of supply and the rapid rent increases seen over the past two-and-a-half years.

New York City led year-over-year rent growth gains at 5.8%, followed by New Jersey at 4.1% and Columbus, Ohio, at 3.5%. Austin, Texas; Phoenix; Atlanta; Portland, Oregon; and Las Vegas saw the biggest declines.

“While the economy continues to produce solid results, market attention is focusing on the seeming inevitability of slowing job growth and the capital markets conundrum of higher interest rates,” stated the report. “The longer rates stay in the 4.5% to 5% range, or higher, the more multifamily properties will face capital gaps when loans come up for financing.”

Month over month, asking rents remained unchanged in the renter-by-necessity segment and fell 0.4% in the luxury lifestyle segment in October. Out of the top 30 metros, rent growth was negative in 27 metros in lifestyle but only 15 in renter-by-necessity.

New Jersey led month-over-month gains in asking rents at 0.2%, followed by Kansas City, Missouri, at 0.2% and New York at 0.1%. The rest of the metros were unchanged or saw declines.

According to Yardi Matrix, absorption remains strong in many markets where rent growth is negative, including Austin; Orlando, Florida; Nashville, Tennessee; Phoenix; and Raleigh and Charlotte, North Carolina.

“Rents are receding in these metros due to the robust delivery pipeline and rapid rent increases in recent years that have reduced affordability,” noted the report.

National asking rents for single-family rentals (SFRs) decreased slightly last month by $2 to $2,121. Year-over-year growth decreased 30 basis points to 1%, and occupancy rates were at 95.9%, up 10 basis points year over year. Nashville, California’s Orange County, and Kansas City saw the highest year-over-year growth, while Orlando, Austin, and Seattle came in at the bottom of the list.

“SFR operators are focusing on operational efficiency, which is critical given recent above-trend increases in expenses,” stated the report. “Total SFR operating expenses rose by 12.2% on a trailing 12-month period ending in September 2023.”