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Multifamily performance remains steady despite the looming threat of a slowing economy. U.S. asking rents saw a $7 increase in May to $1,716, while year-over-year growth decelerated to 2.6% nationally, 70 basis points less than April and the lowest level since March 2021, according to the latest Yardi Matrix Multifamily Report.

“While performance displays resilience, the data is not unambiguously positive as it has been for most of the last two years,” stated the report. “Rent growth has turned negative in several metros as occupancy rates weaken amid slackening demand and rapid growth in new deliveries.”

Las Vegas and Phoenix, which have been negative for months, saw year-over-year declines of -2.8% and -2.6%, respectively. The markets were joined by Austin, Texas (-1%); Seattle (-0.9%); San Francisco, Atlanta, and Sacramento, California (-0.4%), and California’s Orange County (-0.2%).

According to the report, “in part, negative growth is a reversion to the mean after two years with unusually high gains.”

Seven of the eight top 30 metros that were above the national average rent growth figures are in the Midwest or in markets that did not see the large post-pandemic gains, such as Indianapolis; Kansas City, Missouri; New York; Boston; and Chicago.

Yardi Matrix also pointed to decreasing occupancy rates as another factor for weaker rent growth. The declines are attributed to slowing household formation, competition from new deliveries, lack of affordable housing, and diminishing demand as corporate layoffs begin to increase and consumer confidence dwindles.

The national occupancy rate was unchanged in April at 95%. Year over year, occupancy rates fell in all but one of the Matrix top 30 markets. According to the report, New York had a 98% occupancy rate in April, while Las Vegas had the largest decline at -1.8%.

Month over month, asking rent growth was seen in both the renter-by-necessity and luxury lifestyle segments in May. Out of the top 30 metros, 25 recorded gains in renter-by-necessity rents and 22 in lifestyle rents.

Chicago led month-over-month gains in asking rents at 1%, followed by New York and San Jose, California (0.9%), Denver (0.8%), and Seattle (0.7%).

The single-family rental (SFR) sector also continues to see strong demand. National asking rents for SFRs increased last month by $7 to $2,100; however, year-over-year growth declined by 40 basis points to 2.1%. These rents have moderated from last year’s double-digit growth, with Miami; Phoenix; Austin; and Raleigh, North Carolina, among the markets where SFR rents have decelerated. Occupancy rates are down more than 200 basis points from the pandemic peak, settling at 95.6%.

“Institutional SFR growth remains focused on build-to-rent product, as home sales have declined in recent months due to the lack of inventory and rising mortgage rates,” stated the report. “Although home prices have remained surprisingly firm, the number of homes on the market for sale remains less than half of what it was in the years before the pandemic.”