National Multifamily Report – November 2022

Year-over-year rent growth decelerated further, down to 7 percent in November. Asking rents fell $9 during the month, according to Yardi Matrix.

Following sustained growth of 22 percent between January 2021 and October 2022, the national average asking rent fell $9 to $1,719 as of November, according to Yardi Matrix’ latest survey of 140 markets. This marked a year-over-year growth of just 7 percent, the lowest in 17 months, and the largest one-month rent decline in well over a decade. Year-to-date rent growth stood at 6.4 percent, while the national average occupancy rate in stabilized assets stood at 95.6 percent as of October. The single-family rental market mirrored the multifamily market and the average U.S. asking rent fell 80 basis points to 5.9 percent year-over-year, a $5 decline, to $2,091.

Demand is waning, as consumer sentiment is weakening as a result of high inflation, and economic growth is slowing due to the Fed’s measures to halt it. Of Yardi Matrix’ top 30 metros, almost two-thirds saw decreases over the last three months, and more than 90 percent saw rent contraction over the last month. On an annual basis, all top 30 metros posted growth. Indianapolis, a metro that a few months ago would have barely made it into the top 20 metros for rent increase, took the top spot in year-over-year increases (11.4 percent) and was the only metro with double-digit gains. Still, it remains among the least expensive of the major metros—the average rent rose $4, to $1,224, nearly 30 percent below the U.S. average.

Apartment absorption remained positive in 2022 but lagged 2021 levels. National occupancy slid 60 basis points year-over-year, with nearly half of the top 30 metros registering drops of 1 percent or more, with the largest declines in Las Vegas (-2.5 percent to 93.6 percent), Tampa (-1.9 percent to 94.8 percent) and Phoenix (-1.9 percent to 94.1 percent).

On a month-over-month basis, national rents fell 0.5 percent, the largest monthly drop since the global financial crisis. In part, the decline can be attributed to the seasonal pattern, but the effect of high inflation is also a substantial factor contributing to the declining demand for housing. The average rate was brought down by the Lifestyle segment (-0.8 percent), while Renter-by-Necessity rents depreciated by 0.2 percent. New York (0.4 percent) and Indianapolis (0.3 percent) were the only metros to record monthly gains in November. In another two markets, rent growth remained flat (Kansas City and Miami) and in 26, rent growth declined. The worst-performing metros on a monthly basis were (Boston (-1.3 percent) and Las Vegas (-1.2 percent). High in-migration markets like Austin (-0.8 percent), Atlanta and Denver (both -0.9 percent) are also showing signs of weakness.

National renewal rents improved slightly from September, up 11.3 percent year-over-year through October, as property owners strive to bring rents of existing tenants closer to asking rents. However, with the asking rate for new leases turning negative, growth in renewal rents is expected to slow in the coming months. The highest renewal rents remained in Miami (19.1 percent), Tampa (18.8 percent), and Raleigh (16.8 percent). National lease renewals continued to drop from the peak of 68 percent in the fourth quarter of 2021, to 60.4 percent in October. The highest lease renewal rates include Philadelphia (75.6 percent), Kansas City (68.4 percent), Miami (65.3 percent) and Indianapolis (64.2 percent). San Francisco (43.9 percent) and San Jose (47 percent) sat at the other end of the ranking.

The slowdown in transaction activity is reflected in GSEs’ inability to lend their total allocations in 2022. One reason is that, at the start of the year, mortgage rates stood at 3 percent or less, while now, GSE loan coupons rose to the 5.5 to 6.5 percent range, and higher for small-balance loans. As a result, borrowers would rather wait. Another reason is the widened bid-ask spread—buyers seeking increased yields and sellers resisting unless they are committed to making a deal.

The average asking rent in the SFR segment rose 5.9 percent year-over-year in November, an 85-basis-point decrease from October. The occupancy rate declined 1.4 percent year-over-year through October but is still strong at 95.9 percent. The impact of the rising interest rates on the SFR segment is likely to be positive as fewer SFR tenants afford to purchase a home.


Read the full Yardi Matrix report.

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