Dive Brief:

• While apartment rents are still rising, they are doing so at a much more moderate rate now than in 2021 and early 2022, according to Jay Parsons, vice president, head of economics and industry principles at RealPage, in a report.
• Same-store asking rents for new leases rose by 0.4% between July and August 2022, according to data from RealPage Market Analytics. While this stands far below the 1.9% rent spike in August 2021, rent growth tends to drop off in the summer, Parsons said. 
• At the same time, effective asking rents grew 10.5% year over year, down from a peak of 15.7% YOY in February. 

Dive Insight:

Out of the 150 largest markets tracked by RealPage, only 17 saw higher rent growth YOY in August than in July. 

“There’s a lot of panicky ‘It’s a big slowdown!’ analysis out there right now, but remember: Nearly every major rental owner, operator and analyst expected to see moderation in rent growth in 2022 compared to the historic peaks of 2021,” said Parsons. “...Apartment fundamentals are still very healthy and should continue to be. Apartments are just trending more toward sustainable balance.”

However, there are some markets where rents are falling past the point of moderation.

Asking rents in Phoenix, for instance, fell 0.4% from July to August. This marks the first drop for Phoenix rents month to month since May 2020. YOY rent growth has fallen to 7.9% in August, down from 26.7% in January. Las Vegas is in a similar pattern, with rents down 0.5% month to month in August and up 8.8% YOY. Both cities are also seeing a large drop in retention rates, though they still remain above pre-COVID levels.

A number of Florida markets have also seen rents falling from July to August, and West Palm Beach, Jacksonville, Tampa, Fort Lauderdale and Orlando have also experienced rapidly-cooling YOY rent growth.

Many Midwestern markets, including Cincinnati, Minneapolis, Milwaukee, Cleveland and Kansas City, Missouri have experienced less of a slowdown in rents.

Conversely, Sun Belt metros — excluding the Florida markets — are still going strong, particularly compared to coastal markets. 

Between January and August 2022, year-over-year rent growth cooled more in New York, Boston and San Francisco than it had in Dallas, Houston, Charlotte, North Carolina, San Antonio or Virginia Beach, Virginia.

RealPage’s data differs slightly from Yardi Matrix’s observations for August, which said rents rose 10.9% YOY and fell by 0.1% from July to August.