August Continues Rent-Gain Streak
The economy is doing well and multifamily demand has been consistent, so supply has been one of the trouble spots. However, rents have still increased every month during 2017.
By Mallory Bulman
According to Yardi Matrix’s monthly survey of 121 markets, August kept a streak alive during which rents have increased every month this year. Average U.S. monthly rents increased $1 to $1,352, while on a year-over-year basis, rents increased 2.4 percent nationwide. “Although overall gains have been slowing during the summer months,” the report states, rents have still increased every month during 2017.
The economy is doing well and multifamily demand has been consistent, so supply has been one of the market’s possible trouble spots. The amount of new luxury residences has been a critical factor in rent growth in 2017. Markets with a large supply pipeline, like Houston, Austin, San Francisco, D.C. and Nashville have experienced rapidly decreasing rent growth. Good news for those markets is that the new supply seems to be slowing. Deliveries averaged 17,700 per month in 2016, but fell to 14,500 during the first quarter of 2017.
Some of the decrease in deliveries may be connected to an increase in project delays. According to the report, on-third of the current 480,000 units under construction in the U.S. are delayed by an average of 7.5 months. “The primary reason for the delays is the critical shortage of construction workers, which is not a new trend but is being exacerbated by the Trump administration’s more restrictive immigration policies,” the survey reports.
Yardi Matrix is reducing the forecast for new deliveries in 2017 to 300,000, considerably fewer than the 360,000 that was expected and only slightly more than the 281,000 that came online in 2016. Matrix now believes that the supply cycle will peak in 2018, with 360,000 new units delivered.
To view the full August report, visit Yardi Matrix.