National Multifamily Report – April 2023

Year-over-year multifamily rent growth, all asset classes. Chart courtesy of Yardi Matrix

The U.S. multifamily market remained resilient and the average asking rent inched up $5 in April, to $1,709, according to Yardi Matrix’s latest survey of 140 markets. The rent appreciation is the equivalent of a 3.2 percent year-over-year increase, down 80 basis points from March, and half the growth posted in the same month between 2015 to 2019. Rent gains were positive year-over-year everywhere except for Phoenix and Las Vegas. Occupancy remained flat at 95 percent. Meanwhile, the average rent for single-family rentals rose to a new all-time high, at $2,089, up 2.3 percent year-over-year, 60 basis points below the March growth rate. The sector’s occupancy rate stood at 95.5 percent in March.

The tight job market and still strong consumer balance sheets keep demand healthy, but concerns arise as to how long these conditions can continue. Economic growth will likely soften in the coming quarters, impacted by the slowdown in housing sales and construction from higher interest rates, dwindling post-pandemic consumer savings and reduced credit as banks try to de-risk loans, and the reduction of the Federal Reserve’s balance sheet. In the coming years, a rising number of multifamily loans will be maturing, under worse conditions than at issuance—fixed-rate loan coupons increased by 200 basis points or more over the last year, and the increase is higher for floaters with interest rate caps. According to Yardi Matrix, about 15 percent of the $2 trillion of multifamily loans outstanding are maturing by the end of 2025, and more than half are maturing by 2030.

Year-over-year rent growth was led by metros in the Midwest and Northeast, with Indianapolis still in the lead (7.7 percent), followed by Kansas City (6.4 percent), New York (6.2 percent), Boston (5.2 percent) and Chicago (5.0 percent). Rent growth was increasingly concentrated in Renter-by-Necessity properties (5.1 percent year-over-year), while upscale Lifestyle rents rose 1.5 percent annually. In the meantime, the national occupancy rate, stable at 95 percent in March, points to sustained demand. On a year-over-year basis, the rate declined by 100 basis points, with the biggest declines in Las Vegas (-1.8 percent) and Tampa (-1.7 percent). New York was the only metro without a decline in occupancy compared to last year, at 97.9 percent in March.

On a monthly basis, the average U.S. multifamily asking rent increased by 0.3 percent for Renter-by-Necessity units and 0.2 percent for Lifestyle apartments. Specifically, 22 of the top 30 Matrix metros posted gains in the RBN segment and 20 saw increases in Lifestyle rents. Monthly gains were led by Raleigh, New York and Boston (all 0.9 percent), followed by Kansas City and Philadelphia (both 0.8 percent) and Chicago (0.7 percent). The bifurcation between property segments continues to develop, indicating that demand favors more affordable product—Sacramento (0.2 percent RBN, -0.1 percent Lifestyle), Dallas (0.2 percent RBN, -0.4 percent Lifestyle), Seattle (0.2 percent RBN, -0.5 percent Lifestyle) and Las Vegas (0.6 percent RBN, -0.6 percent Lifestyle).

National renewal rent growth remained flat at 9.4 percent year-over-year through February. With the U.S. asking rent growth at 3.2 percent year-over-year through April, renewal rents will likely decline, too. Still, the persisting high renewal lease rate points to outsized increases for new leases and a lack of supply. Meanwhile, national lease renewal rates clocked in at 64 percent in February, on a decelerating trend from the 66.6 percent peak marked in October 2022. Philadelphia (79.1 percent), Miami (70.2 percent) and Kansas City (69.1 percent) led the ranking.

The single-family rentals average asking rent rose 2.3 percent year-over-year in April, 60 basis points below the rate from a year ago. This is the equivalent of a $6 increase, to $2,089. Occupancy rates remained unchanged at 95.5 percent, down 1.2 percent from the same month a year ago. The sector’s stock expanded as home sales tapered off due to higher rates and reduced affordability. According to Yardi Matrix data, 14,581 SFRs in communities of 50 units or more were delivered in 2022, which is nearly 47 percent above the 9,928 SFR units delivered in 2021, and 2023’s volume is anticipated to match last year’s.

Read the full Yardi Matrix report.