Dive Brief:
- After six months of growth, the national average multifamily rent fell by $1 in August, down to $1,741, according to Yardi Matrix’s latest National Multifamily Report. Rent growth remained unchanged year over year at 0.8%.
- Yardi attributes this stagnant performance to market adjustments ahead of an anticipated interest rate cut this month. These lower rates are expected to spur asset sales and refinancing for multifamily properties, as well as reduce pressure on underwater mortgages.
- However, this rate relief indicates a slowing economy, and in turn less purchasing power and apartment demand from consumers. The Consumer Price Index has fallen under 3%, and the once-robust job market is losing some of its previous gains, the report noted. With supply growth expected to hold strong through 2025, absorption is “vital to multifamily’s health,” according to the report.
Dive Insight:
Demand continues to hold up in the face of rapid supply growth, with occupancy unchanged at 94.7% nationwide in July, according to Yardi. (Occupancy data is current to the previous month.)
Out of the top 30 metros covered in the report, 13 have occupancy rates of 95.0% or above for stabilized properties. These metros have increased their stock by an average of 2.5% while raising rents by 1.7%. At the same time, 12 of the top metros have occupancy rates of less than 94.5%. These metros have added 4.1% on average to their total stock, while rents have fallen by an average of 1.8%.
| Market | YOY rent growth, August 2024 | YOY rent growth, July 2024 | Difference |
|---|---|---|---|
| New York City | 4.8% | 5.2% | -0.4 |
| Kansas City, Missouri | 4.1% | 3.4% | 0.7 |
| Washington, D.C. | 3.4% | 4.0% | -0.6 |
| Indianapolis | 3.0% | 2.7% | 0.3 |
| Columbus, Ohio | 2.9% | 2.9% | 0 |
| New Jersey | 2.9% | 2.9% | 0 |
| Boston | 2.9% | 2.1% | 0.8 |
| Chicago | 2.1% | 2.0% | 0.1 |
| Seattle | 2.0% | 2.1% | -0.1 |
| Detroit | 2.0% | 1.9% | 0.1 |
SOURCE: Yardi Matrix
New York City continues to lead the nation in rent growth at 4.8% YOY, while Austin, Texas, has seen the steepest drop at -5.5% YOY. Las Vegas has experienced the strongest occupancy growth, up 0.9% to 93.6%, while Houston’s has fallen the farthest, down 0.7%.
The national average single-family rent fell by $7 from July to August, down to $2,164, while YOY rent growth fell 40 basis points to 0.7%. Occupancy is posting a slight decline as well, down 10 basis points to 95.3%.
The interest rate cut, if it occurs, is expected to happen at the Federal Reserve’s upcoming policy meeting from Sept. 17-18, according to Reuters.
“Of course, the path forward might not be all rosy,” the report reads. “The Fed might not cut rates as rapidly as hoped. … However, as of now the base-case scenario points to moderate optimism and increasing multifamily deal flow in coming quarters.”
