The national median rent increased by 0.5% in May and now stands at $1,379, marking the fourth straight monthly increase as the market enters the busy summer moving season, according to the June report from Apartment List.
“We are now entering the time of year when the bulk of moves take place, and as such, we’ll likely see continued price increases through the summer, in line with typical seasonal patterns,” the Apartment List Research Team writes.
“Prices generally increase in the spring and summer when most moves take place, and then soften in the fall and winter as moving activity slows. The broad contours of this seasonal pattern have been largely stable, but in recent years we’ve seen sharper winter dips and more modest summer bumps as the market has gone through a soft spell amid a wave of new multifamily construction,” the report says.
Highlights of the June report national median rent increase
- Rent prices nationally are down 1.5% compared to a year ago. Year-over-year rent growth ticked up slightly compared to last month, but remains near the lowest levels in our estimates going back to 2017. The national median rent has now fallen from its 2022 peak by a total of 4.4%.
- The national multifamily vacancy rate currently stands at 7.2%, down slightly from the February peak. After hitting a new record in February, the vacancy rate is now decreasing for the first time in over four years.
- Units are taking an average of 30 days to get leased after being listed, which is down from 34 days last month, but still two days longer than at this time last year.
- The Austin, Texas metro continues to have the softest conditions among the nation’s large rental markets, with the median rent there down by 5.1% over the past year. At the other end of the spectrum, the San Francisco metro now sits atop the rankings of fastest year-over-year rent growth at +6.3%.
Multifamily vacancy sees first decline since 2021, dropping to 7.2%
The most important driver behind the soft market conditions that have persisted for more than three years is a historic surge of multifamily construction. Now, deliveries of new apartments have slowed considerably.
Over the past few years, the vacancy rate has consistently loosened, gradually moving from record lows to record highs, but it appears to have finally hit its peak. It’s possible that the vacancy rate will simply plateau at this elevated rate, rather than continuing to decline in a meaningful way.
List-to-Lease time remains elevated at 30 days
Despite the month-over-month decline, list-to-lease time remains somewhat elevated. This month’s reading is the longest seen in any May going back to 2019.
Units are taking two days longer to turn over than at this time last year, and 12 days longer than they were in mid-2021 when the market was at its hottest. This lengthened list-to-lease time is in line with the generally cool rental market conditions observed in our other key market indicators of negative rent growth and soft occupancy.
Summary
As the rental market enters its busy summer leasing season, there are some early signs that the tide may be turning on the soft conditions that have defined the market over the past three-plus years. Despite the modest tightening over the past two months, multifamily conditions remain notably cool overall, and an uncertain macroeconomic outlook presents risks to rental demand. The coming months will provide more clarity on whether the market is simply plateauing or actually turning the corner.
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