Rent Growth Accelerates Again Up 1.2 Percent In May

Rent Growth Accelerates Again Up 1.2 Percent In May

National rent growth accelerated slightly again in May, with the national index up by 1.2 percent over the course of May, the largest monthly increase of the year so far, according to Apartment List.

“So far this year, rents are growing more slowly than they did in 2021, but faster than the growth we observed in the years immediately preceding the pandemic. Over the first five months of 2022, rents have increased by a total of 3.9 percent, compared to an increase of 6.1 percent over the same months of 2021,” the Apartment List research team writes in the report.

Rent growth likely to exceed pre-pandemic trends

Year-over-year rent growth currently stands at a staggering 15.3 percent, but is down slightly from a peak of 17.8 percent at the start of the year the report says.

“Based on what we’ve seen so far this year, rent growth in 2022 seems likely to continue exceeding the pre-pandemic trend, even as it moderates substantially from 2021 levels,” the report says.

Rents increased in May in 96 of the nation’s 100 largest cities, though 70 of these cities have seen slower rent growth in 2022 so far than they did last year, and some of the hottest Sun Belt markets are finally showing signs of plateauing growth.

Vacancy rate continues upward trend

The national vacancy index ticked up slightly again in May, continuing a streak of gradual easing dating back to last fall.

vacancy rate continues upward as rent growth accelerates

“Our vacancy index now stands at 5 percent, up from a low of 4.1 percent, but remains well below the pre-pandemic norm,” the report says.

Although this gradual easing in occupancy is a positive signal, the market remains historically tight.

“And although we’re now at the start of the busy season for the rental market, when the bulk of moving activity normally takes place, rapidly rising rents may incentivize many renters to stay put and renew existing leases rather than looking for new ones. At the same time, the recent spike and mortgage rates has created yet another barrier to a historically difficult for-sale market, potentially sidelining would-be homebuyers and keeping them in the rental market.

“Given these factors, it’s possible that the easing of our vacancy index could level off in the coming months,” the report says.

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