Anticipated increases in multifamily supply have prompted Yardi Matrix to reevaluate its rent-growth projections for 2027, according to Yardi Matrix Multifamily Rent Forecast Update.
“The main change to our forecast is a more tepid 2027, with a national asking rent growth of 2% vs. 3%” from previous forecasts, said Andrew Semmes, senior research analyst, in the report.
This forecast is the result of more than 400,000 new units expected to come online in 2027, more than previously estimated, leading to tepid rent growth that year.
In addition to new units coming onboard, the projection is for “a more modest trajectory of household formation as the labor market moderates and population growth returns to its pre-COVID decelerating trajectory. Continued decent GDP growth and high federal government financing needs do not warrant reduced long-term interest rates, which we expect will keep mortgage rates high and multifamily turnover at its current lower level,” Semmes said in the report.
Factors driving the projection
The multifamily sector closed the summer leasing season with disparate results by market reflecting complex and uneven economic signals that have come further into focus, such as:
- Payrolls and employment gains have slowed with data revisions
- Consumer spending remains but sentiment has weakened
- Policy to reduce short-term interest rates remains intact but not without some pushback
- Slower growth on a longer timeline before rising to moderate growth
“Seasonal advertised rent growth continues to flatten and underperform historical norms. On a national basis, the average month-over-month asking rent growth was in the 0.1% range, well below the previously reported 0.4% pace for 2010-19,” the report said.
Key takeaways:
- Different economic and policy headwinds reveal the United States is in a more vulnerable position than previously reported, though the effects differ in severity by market.
- The result of all these forces is a slowly recovering apartment market in areas of high supply, but one which is fragile.
- Year-over-year national rent growth for 2026 is expected in the mid- to low-1.2% range, before a modest ramp-up in 2027 to 2% and then a stronger 2028 and beyond, with forecast increases of 3.4% to 3.8%.
