Multifamily rents ticked up slightly in May, according to Yardi Matrix’s National Multifamily Report. The U.S. average advertised rent inched up $6 to $1,767, with year-over-year growth rising to 0.2%.
Despite the seasonal spring increase being positive, advertised rents are muted compared with pre-pandemic levels.
“While the seasonal pattern remains intact, the spring leasing season is generating less pricing power than it did historically,” noted the report. “The reasons include the wave of deliveries and large number of properties in lease-up, economic uncertainty, and the lack of affordability affecting lower-income tenants.”
According to Yardi Matrix, another indication of softer market conditions is occupancy decline. The national occupancy rate has dropped to 94.1%, the lowest level since 2013. This also is more than 200 basis points from its cycle peak in 2022.
Year-over-year rent growth continued to be strongest in gateway and Midwest markets in May. San Francisco moved to the top of the list with 4.5% annual growth, followed by Chicago, 3.5%; New York City, 3.3%; the Twin Cities, 2.6%; and Kansas City, Missouri, 2.1%. Negative rent growth continued to be seen in many high-supply Sun Belt and Western metros, with Austin, Texas, at -3.7%; Phoenix, -3.1%; Denver, -2.9%; Tampa, Florida, -2.8%; and Raleigh, North Carolina, -1.7%.
San Francisco, which is benefiting from strong demand related to artificial intelligence-related job growth, was also the only major market to post an occupancy increase of 0.2%. All other markets saw decreases, with the largest drops in Tampa, -1.4% as well as Las Vegas and Houston, both -1.1%. On an absolute basis, Texas remains one of the weakest areas with the lowest occupancy rates among major markets: Houston, 91.6%; Austin, 91.8%; and Dallas, 92.3%.
Month over month, lifestyle rents increased 0.4% in May, while renter-by-necessity rents rose 0.3%. Nearly all metros, including many with high supply, posted positive month-over-month gains. The strongest increase was led by New York City, 1.2%, followed by Baltimore and Charlotte, North Carolina, both at 0.9%. Only four markets saw declines in May: Phoenix, -0.4%; Indianapolis, -0.2%; and Miami and Atlanta, both -0.1%.
The single-family rental (SFR) segment also saw increased advertised rents in May, bumping up $8 to $2,224, essentially flat year over year. Occupancy rates averaged 94.5%, down 50 basis points from the prior year.
Rent growth mirrors the multifamily sector—strong in the Midwest and weaker in high-supply Sun Belt and Western markets. The strongest year-over-year performers were Chicago, 7.2%; South Dakota, 5.3%; Columbus, Ohio, 4.5%; and Kansas City, 4.3%. The weakest markets were Austin, -3.4%; Phoenix and Denver, both -3.2%; Greenville, South Carolina, -3.1%; and Dallas-Fort Worth, -2.7%.
“The nearly 11-percentage-point spread between the strongest and weakest SFR markets underscores a growing bifurcation in performance, with market-level outcomes diverging even more sharply than in the multifamily sector, where the spread is closer to 8 percentage points,” noted the report.