U.S. multifamily rent growth remains strong despite a deceleration in rent growth performance as asking rents are up 12.6 percent year-over-year through July, as demand continues to exceed supply, Yardi Matrix says in the July Multifamily Report.
Supply continues to be an issue and the National Multifamily Housing Council estimates that the U.S. needs 4.3 million new units built through 2035 to meet demand.
“Rent growth remains lofty just about everywhere by historical standards, but the rate of increase in high-growth metros is falling,” Yardi Matrix says in the report.
Here are some highlights in the report:
- Multifamily performance continued to improve steadily in July, albeit modestly. National asking rents increased $10 in July, bringing the average rent in the U.S. to a record $1,717.
- Year-over-year growth decelerated by 110 basis points to 12.6 percent, 260 basis points off the February peak of 15.2 percent.
- Demand and rent growth remained strong throughout the country. Rent growth increased at least 10 percent year-over-year in 24 of Yardi Matrix’s top 30 metros. National occupancy rates were 96.0 percent for the third month in a row.
- The single-family sector continues to grow at a steady pace. The average single-family asking rent increased by $7 in July to $2,092, while year-over-year growth dropped by 60 basis points to 11.2 percent.
Economic growth is slowing and polls show consumer confidence is weakening as the Federal Reserve has raised policy rates 150 basis points over the last two months in an effort to slow inflation.
“A weaker economy could cool gains, though apartment asking rents may not immediately respond to the Fed’s actions because rising mortgage rates have slowed the for-sale housing market.
“That might help demand for apartments as first-time homebuyers continue to rent and wait for a more opportune time to buy,” Yardi Matrix says in the report.
Apartment Rent Growth Fueled By Supply Issues
Yardi Matrix says, “A big part of the recent growth in apartment rents has been the supply-demand imbalance. The U.S. currently has a 600,000-unit apartment shortfall with another 3.7 million units needed through 2035 to meet demand.”
- A new study commissioned by the National Multifamily Housing Council and the National Apartment Association details the severe shortage of multifamily housing in America.
- The report estimates that the U.S. needs to build 4.3 million multifamily units by 2035 to meet the needs of the growing population.
- The NMHC-NAA study recommends streamlining the entitlement process and incentivizing more affordable units.
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.