National Multifamily Report – May 2023
The average U.S. multifamily rent rose by $7 in May, to $1,716, according to Yardi Matrix data.
Year-over-year multifamily rent growth, all asset classes. Chart courtesy of Yardi Matrix
The national multifamily market performance remained steady, according to the latest Yardi Matrix survey of 140 markets, with rents gaining $7 in May to $1,716. This represents a 2.6 percent year-over-year increase—the lowest level since March 2021—and 70 basis points below the April rate. Between January and May 2023, the average U.S. asking rent rose $18, or 1.0 percent. Occupancy remained at 95.0 percent in April, falling annually in all but one of Matrix’s top 30 markets—New York (98.0 percent). San Jose’s occupancy remained flat, and Las Vegas posted the largest decline, down 180 basis points. Meanwhile, the average rent for single-family rentals rose to a new all-time high in May to $2,100, up 2.1 percent year-over-year.
The seasonal growth was slower than a typical pre-pandemic year, as a number of metros with negative year-over-year rent growth—Las Vegas (-2.8 percent) and Phoenix (-2.6 percent), on a downward trend for months—were joined by Austin (-1.0 percent), Seattle (-0.9 percent), San Francisco, Atlanta and Sacramento (-0.4 percent), and Orange County (-0.2 percent). Another reason for the slow multifamily rent growth was the decline in occupancy, affected by a combination of factors including slowing household formation, new stock expansion, scarcity of affordable units and deteriorating demand as layoffs intensify and consumer confidence declines. The U.S. has roughly one million multifamily units under construction and 900,000 of these are slated to come online by the end of 2024. While deliveries will be focused in 10 to 15 of the fastest-growing markets, and as a result will be easily absorbed, Matrix has identified eight major metros in which deliveries will add at least 8.0 percent to current stock (more than 10,000 units)—Austin (17.1 percent of stock), Miami (14.2 percent), Raleigh-Durham (13.5 percent), Charlotte (12.8 percent), Salt Lake City (11.4 percent), Jacksonville (10.2 percent) and Phoenix (8.8 percent).
Year-over-year rent growth was led by metros in the Midwest and Northeast: Indianapolis maintained the top spot (7.0 percent), followed by Kansas City (6.0 percent), New York (6.0 percent), Boston (4.8 percent) and Chicago (4.6 percent). Meanwhile, in eight metros multifamily rent growth turned negative and more are expected to follow soon. On a monthly basis, the U.S. asking rent was up 0.4 percent in May. Contrary to typical late-cycle patterns, growth in the Lifestyle segment (0.4 percent) surpassed that in the Renter-by-Necessity segment (0.3 percent). Furthermore, rents increased in 25 of the top 30 Yardi Matrix metros in RBN and 22 in Lifestyle. Lifestyle rents increased by 1.0 percent or more in Seattle (1.4 percent), Denver (1.1 percent), and Nashville, Chicago, New York and San Jose (1.0 percent). Leading in overall monthly gains were Chicago (1.0 percent), New York and San Jose (each 0.9 percent), Denver (0.8 percent) and Seattle (0.7 percent).
National renewal rent growth was 8.2 percent year-over-year in March, down from 9.4 percent in February. The metros with drops in renewal rents were Los Angeles (4.8 percent in March from 12.2 in February), San Francisco (1.4 percent from 5.6 percent), Chicago (4.2 percent from 8.5 percent) and Austin (9.5 percent from 11.5 percent). Meanwhile, national lease renewal rates stood at 61.8 percent in March, from 64.9 percent in February.
The single-family rental average asking rent rose 2.1 percent year-over-year, to $2,100. The sector is boosted by fewer home sales, and by the average 30-year mortgage rate, again above 6.5 percent. Occupancy remained flat at 95.6 percent, which is 100 basis points below the rate recorded in the same month a year ago, and down more than 200 basis points from the peak posted during the pandemic. SFR rents decelerated in Miami (-4.5 percent), Phoenix (-2.6 percent), Austin (-0.3 percent) and Raleigh (1.2 percent). Institutional SFR growth was focused on build-to-rent product, influenced by the decline in home sales and rising mortgage rates. While home prices remained firm, the number of homes on the market for sale was less than half of what it was pre-pandemic.
Read the full Yardi Matrix report.
