National Multifamily Report – February 2024

The average U.S. asking rent gained $1 to $1,713 in February, for a 0.6 percent YoY increase. Read the report.

The U.S. multifamily market showed signs of stability, with rents inching up for the first time in seven months, Yardi Matrix’s latest survey shows. The average asking rent rose $1 to $1,713 in February, for a 0.6 percent year-over-year growth, while the occupancy rate decreased by 60 basis points year-over-year to 94.5 percent as of January. Meanwhile, single-family rents fell $2 in February to $2,133, for a 1.2 percent year-over-year growth.

As 1 million units are forecasted to come online through the end of 2025, occupancy will likely decline, according to the report, especially in markets with large construction pipelines. High-supply Sun Belt markets will continue to post rent declines, balancing the rent growth recorded in Northeast and Midwest markets. Affordability will have a big impact on rent performance in Midwest metros Columbus, Kansas City and Indianapolis. All three are in the top six February rent rankings, and all three marked occupancy declines over the past year.

In the year ending in February, rent growth was led by New York (5.4 percent), New Jersey (3.8 percent), Columbus (3.6 percent), Kansas City (3.3 percent) and Chicago (3.1 percent). Meanwhile, 13 of Yardi Matrix’s top 30 metros posted negative rent growth, five of which marked rent declines of 3.0 percent or more year-over-year. Austin had the weakest performance, down 6.2 percent. Occupancy remained positive only in San Francisco (0.1 percent), while three Matrix top 30 markets recorded declines of 1.0 percent or more: Atlanta (-1.2 percent), Indianapolis (-1.2 percent) and Austin (-1.0 percent).

On a monthly basis, rents rose 0.1 percent in the Renter-by-Necessity segment and remained flat in the Lifestyle segment. Rents contracted in 13 of the top 30 metros in Lifestyle and eight of the top 30 in RBN. Overall monthly rent gains were led by New York (0.6 percent), Miami (0.3 percent) and Chicago (0.2 percent). The weakest performance across segments was recorded in Austin (down 0.6 percent in Lifestyle and 0.4 percent in RBN) and Raleigh (down 0.5 percent in Lifestyle and 0.4 percent in RBN).

Darker times for Sun Belt metros

Investor interest in Sun Belt and Southwestern metros has softened, primarily due to deliveries and construction pipelines. Raleigh, Charlotte, Austin, Miami, Nashville and Orlando added more than 4.0 percent to stock in the previous 12 months. During that time, rent performance turned negative: Austin (-6.2 percent), Raleigh (-3.0 percent), Nashville (-1.9 percent) and Charlotte (-1.5 percent). In addition, construction pipelines are substantial in some metros: Austin (64,000 units underway, or 21.8 percent of existing stock), Charlotte (37,000 units, or 17.4 percent of stock), Miami (27,000 units, or 17.3 percent of stock), Salt Lake City (21,000 units, or 16.8 percent of stock), Raleigh-Durham (30,000 units or 16.6 percent of stock) and Nashville (28,000 units, or 15.9 percent of stock).

Mirroring asking rents, renewal rent growth is moderating, up 4.6 percent nationally year-over-year in January, 20 basis points below December’s rate. Leading metros in renewal rent growth were Boston (9.5 percent), Miami (8.3 percent) and Kansas City (8.0 percent). Two metros registered negative renewal rent growth: Austin (-1.2 percent) and New York (-1.0 percent). A curious fact is that Austin had the largest decline in asking rent, while New York had the largest increase. The national lease renewal rate averaged 64.8 percent in January, marking the first dip below 65 percent since July 2021.

Single-family rents declined $2 in February, to $2,133, for a 1.2 percent year-over-year increase. Occupancy remained flat in January at 95.6 percent, higher for RBN assets (97.3 percent). Lifestyle occupancy was healthy, at 95.2 percent. The sector benefits from high mortgage rates and the scarce inventory of for-sale properties. In addition, homebuilders’ difficulty in obtaining construction loans is another growth driver for SFRs. They trade in bulk homes and development sites to institutional investors. The SFR pipeline had 64,000 units underway, per Yardi Matrix’s database.

Read the full Yardi Matrix multifamily real estate report.

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