Multifamily is awaiting the news of the September rate cut with “hope that lower rates will break the logjam in the transactions market and spur refinancing activity,” Yardi Matrix says in the August report.
However, the rate cut also presages a slower growing economy. For example, rents in August stopped growing in most places except the Midwest and are likely to trend lower in coming months.
Some highlights of the report
- The multifamily market’s run of rent gains ended in August, as seasonality and the high number of deliveries in the Sun Belt served to mute growth. The average U.S. advertised rent fell by $1 in August to $1,741, while year-over-year growth was unchanged at 0.8%.
- Despite the end of the six-month streak of positive rent growth, the news was not all bad. Demand continues to hold up, keeping the national occupancy rate unchanged at 94.7% in the face of rapid supply growth.
- Single-family rental rents hit a bump in August, with advertised rents falling $7 nationally to$2,164. The year-over-year growth rate dropped 40 basis points to 0.7%. The national occupancy rate fell 10 basis points to 95.3% in July.
Change is brewing
The coming changes are likely to be incremental rather than drastic, the report says.
“Lower rates will be a relief to multifamily, potentially unlocking asset sales and refinancings, while reducing the pressure on properties that are underwater on their mortgages.
“The flip side of rate relief, however, is that it is a result of the economy slowing,” the report says.
The slowing jobs market is also a point of concern.
“The declining quits rate and weakness in office-using job growth are other signs of slowing, which could turn into a drag on consumers and apartment demand,” the report says.
Read the full Yardi Matrix 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.
