May the Rent Growth Be with You

Yardi Matrix's latest monthly report reveals persistent rent growth on the heels of the U.S. economy's 74th consecutive month of employment increases.
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Rent growth deceleration clearly isn’t as imminent as once thought, as Yardi Matrix’s monthly rent survey reported another all-time high in rent growth. According to the report, U.S. rents increased $10 to an average of $1,204, an average 0.9 percent increase during the month and 6 percent more than this time last year. On a year-over-year basis, metros like Seattle, Sacramento and Portland came out on top with increases of more than 11 percent. Phoenix and Atlanta also displayed strong growth with both falling in the mid-8-percent range. San Francisco, Denver and Houston continue to decelerate.

The U.S. apartment sector’s strength is indicated with another month of above-average rent growth and April’s occupancy rate of 96 percent. However, there were some market-level shifts in performance during May, with Tampa, Austin, Texas and Orlando falling in the monthly ranking while Atlanta and Los Angeles slowly inch up. The report cites job growth and the transition of Millennials into prime renting years as major catalysts for demand, stating, “The U.S. economy posted its 74th consecutive month of employment growth, pushing the net gain to date in this expansion to 13.5 million jobs. Meanwhile, growth in the prime renter age cohort is expected to support the formation of an estimated one million households annually for the next few years.”

The report’s trailing 12-month figure reveals the change in the average rents during the preceding one-year period, which at 6.3 percent in May was virtually unchanged from April. Meanwhile, rents in the Lifestyle and Renter-by-Necessity segments specifically increased 5.9 and 6.5 percent respectively. On a market level, Western cities Sacramento, Seattle, San Francisco and Portland led the trailing 12-month ranking, while slower-growing Mid-Atlantic markets including Philadelphia, Richmond, Baltimore and Washington, D.C., comprised the lower end.

The newest monthly report from Yardi Matrix includes national and metro occupancy information, as well as its usual employment and supply trends and rent growth forecasts. To access the report, visit the Yardi Matrix website here.