Multifamily rents nationally have leveled off as a strong apartment supply delivery pipeline has counteracted ongoing strong demand, Yardi Matrix says in the January Multifamily Housing Report.
The national average asking rent was unchanged at $1,710 in January, with the year-over-year growth rate rising slightly to 0.5%.
The report says the topic of the supply of new apartments coming on line in 2024 dominated the National Multifamily Housing Council’s annual conference, held Jan. 29 to Feb. 1 in San Diego.
Highlights of the report:
- Ongoing strong demand is keeping U.S. multifamily rents steady, even as supply growth exerts downward pressure.
- The Northeast and Midwest continue to outperform in the short term. Demand is created by the strong economy and job growth, while large urban markets are benefiting from two years of high immigration inflows.
- Single-family rental performance remains robust. U.S. average single-family rents rose $2 in January to $2,130, while year-over-year growth rose 20 basis points to 1.5%. Seven of the top 13 metros for rent growth are in the Midwest.
“Another year of weak growth is expected in 2024, largely due to the rapid increase in deliveries that stems from the sector’s strong performance, high liquidity, and favorable treatment in the 2017 tax bill. Yardi Matrix forecasts a record 540,000 units to be delivered in 2024 and another 460,000 units completed in 2025,” the report says.
Fewer new starts in 2024
Completions will peak in 2024, but starts are declining as debt capital grows more expensive.
“Per Matrix, multifamily starts peaked at 678,000 units in 2022. Then, after waning in the second half of 2023, they finished the year at roughly 500,000 starts. Starts will continue to decline in 2024, especially in market-rate apartments,” the report says.
Lease renewals decline
Growth for rent renewals is continuing a downward trend.
“Renewal rents, the change for residents that are rolling over existing leases, fell to 5.1% nationally year-over-year in November, down 10 basis points from October,” the report says. “The national lease renewal rate averaged 66.6% in November. Lease renewal rates have settled into a range, having been between 65.2% and 67.0% for the last seven months.”
Read the full report 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.