Multifamily rents continued to fall in September, but “interest-rate cuts and robust GDP and job growth have given the multifamily market a shot in the arm,” writes Yardi Matrix in the September Multifamily Report.
Nevertheless, the report points out that the heavy delivery pipeline will constrict rent growth in the near term.
Rents falling but not all the news is bad
The report says good news about interest rates and economic growth has “buoyed the spirits” of the multifamily and commercial real estate industry.
Here are the highlights from the report.
- Amid continued healthy demand, multifamily advertised rents fell slightly in September due to seasonality and supply growth in the Sun Belt. The average U.S. advertised rent fell by $3 in September to $1,750, while year-over-year growth was unchanged at 0.9%.
- Supply growth remains the bright line determining advertised rent growth. Among the Matrix top 30 metros, advertised rent growth was positive in eight of the 10 metros with the least supply growth and negative in eight of the top 10 with the most supply growth.
- Single-family rental rates softened slightly in September. Advertised rents fell $3 nationally to $2,167, while the year-over-year growth rate dropped 30 basis points to 0.6%. The national occupancy rate remains high at 95.3%, but is down 30 basis points year-over-year.
The strong economy has been the major driver for apartment demand, and that demand has absorbed the supply of new apartment units.
“More than 300,000 apartment units were absorbed nationally through the first three quarters of 2024, and more than 1.7 million units since the pandemic lockdowns,” in the first quarter of 2020, the report says.
“Absorption has been particularly strong in the Sun Belt and Mountain West, driven by in-migration and job growth. Rents have flattened or turned negative in some metros in those regions because of the wave of supply growth.
“With the typically slower winter months approaching and the supply wave set to continue through 2025, advertised rent growth in those regions will likely stay weak in coming months,” Yardi Matrix says in the report.
Read the full report from Yardi Matrix here.
About Yardi Matrix
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.