While May showed positive multifamily performance with healthy demand for apartments, the ongoing supply is still a challenge in some markets, according to Yardi Matrix in its May National Multifamily Report.
Thus, May was a “mixed bag” of information.
“Rents are rising seasonally, but the 1.0% year-to-date increase is about half of the average growth rate for the five years before the pandemic,” the report says.
The good news: “Demand remains positive as the economy continues to create jobs,” with 2.8 million added in the 12 months ending in April, according to the Bureau of Labor Statistics.
Highlights of the report:
- Rents rose for the fourth straight month in May, but gains have been moderate. The average U.S. asking rent increased by $6 to $1,733, while year-over-year growth was unchanged at 0.6%.
- Multifamily performance continues to reflect a balancing act. Rents are rising in a normal seasonal pattern, as demand and absorption remain strong, but the growth is mitigated by the rapid delivery pipeline in many markets, particularly the Sun Belt.
- The single-family rental market is outperforming multifamily. The average rent increased $6 in May to $2,166. Although the year-over-year growth rate fell 10 basis points, at 1.4% it remains higher than the growth rate for apartments. Occupancy rates fell 10 basis points to 95.3% in April.
Occupancy rates in several markets have declined due to the new supply, and occupancy has fallen below 93.0% in Dallas, Houston, Austin and Atlanta.
“With inflation not falling as quickly as expected, high interest rates present another challenge. Transaction activity remains weak, with sales down more than 20% year-over-year. Property owners must contend with refinancing debt in a high-rate environment and trying to cut rapidly growing expenses,” the Yardi Matrix report says.
Read the full report here.
About Yardi Matrix
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.
