Multifamily Rents Drop Amid Supply Surge

Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August amid the multifamily supply surge

Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August and $3 during the third quarter amid a supply surge, Yardi Matrix says in its September report.

“Still, the market remains robust overall, owing to strong job growth and household formation, despite challenges that include rising energy costs and higher interest rates,” the report says.

  • Weighed down by the slowing economy and a heavy delivery pipeline in some markets, U.S. multifamily rents dipped in September. The average U.S. asking rent fell $6 to $1,722 during the month, while year-over-year growth fell to 0.8%, down 60 basis points from August.
  • Market performance remains divided, as the Top 30 rankings are dominated by metros in the Northeast and Midwest. Most of the 14 metros with negative year-over-year growth are located in the Sun Belt or West.
  • Single-family rents fell for the second straight month, down $4 nationally to $2,104. Year-over-year growth dropped 10 basis points to 0.4%. Occupancy was unchanged at 95.9%, a sign that demand continues to be robust.

Supply Surge

“Much of the negative rent growth stems from the robust delivery pipeline that is putting pressure on rents in some metros.

“Demand and absorption remain positive in almost every metro—and occupancy rates have steadied—due to ongoing strong job growth and household formation. So while rent growth will slow for a while, the market remains healthy,” the report says.

Does The Monthly Drop Signal More Bad News for Multifamily?

Yardi Matrix said the industry “faces headwinds,” including a slowing economy and other factors such as:

  • Consumers are losing some strength as the post-pandemic boom as household savings dwindles.
  • Millions of households will have less to spend as they resume paying student loans.
  • Energy prices are rising.
  • Large-scale workers’ strikes could have an impact if they continue at length.
  • Higher interest rates are working their way through the economy.
  • Companies with greater debt-service costs have less to spend on productive uses.

The Sting of High Interest Rates

The report says multifamily property values have dropped at least 20% based on capitalization rates alone.

“Mortgage rates are over 6% for the government-sponsored agencies and even higher for other types of lenders. Even though delinquency rates remain subdued, many borrowers are being forced to either pay down the loan balance or renegotiate an extension with lenders,” Yardi Matrix says.

Renewal Rent Growth Continues to Fall

Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August amid the multifamily supply surge
Chart courtesy of Yardi Matrix

Renewal rent growth again decelerated in August, to 6.4% year-over-year, down 60 basis points from July. Renewal rents, the change for residents that are rolling over existing leases, have gradually declined since peaking at 11.1% in August 2022.

The national lease renewal rate averaged 60.4% in August.


“The multifamily market heads into the fourth quarter with some headwinds. Not only is it the season when rent growth typically flattens but expectations are that the economy and job market will weaken after a period of strong gains. Every market, though, should be viewed through its own supply/demand drivers,” Yardi Matrix says in the report.

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.