National Multifamily Report – March 2024
The average U.S. asking rent rose 0.9 percent YoY, or $8 to $1,721. Read the report.
The U.S. multifamily market posted encouraging performance in March, with the national average asking rent recording the largest gain in 20 months, according to the latest Yardi Matrix survey of 140 markets. The rate rose 0.9 percent on a year-over-year basis, or $8 to $1,721, and a 30-basis-point improvement from February. The occupancy rate clocked in at 94.5 percent. Meanwhile, single-family rentals posted an average rent growth of 1.2 percent year-over-year, equal to a $9 gain to $2,144 in March.
Of Yardi Matrix’s top 30 metros, 13 recorded rent loss over the past year, but only four metros registered negative movement over the first quarter, and just two were negative in March. Markets in the Midwest and Northeast remained best performers, led by New York City (5.0 percent year-over-year), Columbus (4.5 percent), Kansas City (3.7 percent), Indianapolis (3.5 percent) and New Jersey (3.4 percent). Austin lagged all metros (-5.9 percent), likely due to the high volume of deliveries. The national occupancy rate has remained below the 95 percent mark since June last year, and in February, it decreased by 10 basis points to 94.5 percent. Occupancy was positive only in San Francisco (0.1 percent), while in 21 metros, the rate dropped by 0.5 percent or more. The steepest occupancy drops were registered in Atlanta and Indianapolis (both down 1.2 percent).
The long-touted distress in the financial markets appears to have been delayed as delinquency rates remained low due to borrowers extending their loans. They either pay down some of the loan balance or add extra reserves. Still, Yardi Matrix’s database has 58,000 multifamily loans totaling $1.1 trillion, $150 billion of which are set to mature by the end of 2025 and $525 billion will mature through the end of 2029.
On a monthly basis, multifamily rent growth was even across property segments, up 0.5 percent in both Renter-by-Necessity and Lifestyle. Monthly gains were led by Columbus (1.3 percent), Orlando and Seattle (both 1.1 percent). Rents declined only in Nashville (-0.3 percent) and Baltimore (-0.1 percent). Rent growth was negative in two of the top 30 metros in Lifestyle and three in RBN, but declines were modest, not exceeding 0.5 percent.
Falling into normal seasonal patterns
Although one month of data is insufficient to determine a trend, the $8 rent increase in March points to a return to a normal seasonal pattern, after several years of exceptional performance brought on by the pandemic lockdowns. The 0.5 percent increase for the month and first quarter is in line with the 0.6 percent average for March and the first quarter in the five years preceding 2020. In addition, rents are rising again in markets where occupancy rates are down due to high deliveries.
Renewal rent growth continued to decelerate, up 4.6 percent year-over-year in January. The rate marked a 370-basis-point decline from May’s peak. Indianapolis had the highest renewal rent growth (8.0 percent), followed by San Diego (7.8 percent) and Orlando (7.7 percent). The rate was negative only in Las Vegas (-2.0 percent) and Austin (-1.5 percent). Meanwhile, the national lease renewal rate averaged 64.8 percent in January, the first time in two years below 65.0 percent.
The average rent in the single-family build-to-rent segment rose 1.2 percent year-over-year through March, or $9 to $2,144, 20 basis points below the previous month. In addition, the occupancy rate fell 10 basis points in the 12 months ending in February to 95.3 percent. Despite challenges, the sector performs well, sustained by healthy fundamentals: demand for single-family homes persists, but home sales remain weak as the acquisition cost is prohibitive to many buyers. More so, the median home mortgage payment is about 40 percent higher than the median rent in the U.S.
Read the full Yardi Matrix multifamily real estate report.
