Following a record high rent increase of $2 in August, multifamily rents for September have dropped $1 to $1,412. With year-over-year growth unchanged at 3 percent, this marks the first time since January that rents have not increased. Despite this decrease, the market outlook is positive, with the average national rent growing to $42 over the last three quarters, exceeding expectations for the sector.
A major concern for the market was how occupancy rates would hold up against the surplus of new supply. Rates slipped 100 basis points from 2016 to 2017, shortly after deliveries surpassed 300,000 units per year starting in 2015. Following that, rates hit 95 percent in late 2017 and early 2018, but are slowly climbing back up, reaching 95.4 percent currently. Renter-by-Necessity is even higher, at 95.6 percent, showcasing the need for more affordable housing. As of now, deliveries will remain in the 300,000-unit range through the next year.
Taking a look at the top performing metros, Orlando still remains at the top of the list with a rent increase of 6.1 percent, despite its continued decline in recent months. Following that is Las Vegas with a 6 percent rise and Phoenix with 5.4 percent. The lowest performing metro was San Antonio, which only grew by 0.5 percent. The spread between the highest and lowest growth increases has contracted, settling at 560 basis points. Last year, the spread was 890 basis points, when Sacramento had a 7.3 percent growth and Houston rents fell to 1.6 percent.
To read the full report, visit the Yardi Matrix website.