After two years of rapid gains, U.S. multifamily rent growth hit a wall in August with national, asking rents dropping $1 during the month and year-over-year growth dropping to 10.7 percent, Yardi Matrix says in their national multifamily supply and rent cap report for August.
The drop represents the first month-over-month decline since June of 2020 during the pandemic.
“The numbers presage a slowdown in rent performance in the second half of the year as economic growth and the post-pandemic migration boom begin to slow,” the report says.
A summary from the Yardi Matrix report:
- Multifamily rents finally hit a slowdown in August after a long run, presaging a deceleration that may extend through the second half of 2022. The economy is starting to feel the effects of higher interest rates, while migration is slowing and the increasing lack of affordability is affecting high-growth metros.
- The average U.S. asking rent decreased $1 in August to $1,718, marking the first month since June 2020 without significant growth. Year-over-year growth decelerated by 170 basis points to 10.9 percent. Nationally, asking rents are up 6.6 percent year-to-date. The U.S. occupancy rate was steady at 96.0 percent.
- The single-family sector continues to mirror the activity in multifamily. The average single-family asking rent decreased by $2 in August to $2,090, while year-over-year growth dropped by 170 basis points to 9.5 percent.
Traditional seasonality is present in the rental rates, but also the factors of a slowing economy and slowing migration.
Affordability Becoming An Issue
“Rent growth tends to slow in the fall, but this year comes at the tail end of the unprecedented increases. The deceleration in August was strongest in many of the markets that have had the most growth over the past two years, a sign that affordability is becoming an issue.
“The cooling housing market is a positive demand driver for multifamily, but inflation and a slowing job market are eroding residents’ ability to pay. Rent declines were concentrated in high-end Lifestyle properties, which dropped 0.2 percent nationally in August. Lifestyle rent growth was negative in 21 of Yardi Matrix’s Top 30 metros.
Get the full report here from Yardi Matrix
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.