Rent prices continued to climb for the third month in a row, and while rent increases were modest and sluggish, further increases could stall, Apartment List says in its May report.
The rental market is transitioning into the busy season, with the national median rent increasing for the third straight month but the pace of that positive rent prices growth slowed in April.
“Rent growth is stalling out at the time of year when the rental market is normally gearing up for its busy season. Year-over-year rent growth is also indicative of a sluggish market, remaining negative at -0.8 percent,” Apartment List says in the report.
Is rental market headed for slow summer?
“The national median rent increased by 0.5% in April and now stands at $1,396, but the pace of growth slowed slightly compared to last month.
“This is typically the time of year when rent growth is accelerating heading into the busy moving season, so the fact that growth stalled this month could be a sign that the market is headed for another slow summer,” Apartment List economists write in the May report.
Apartments on average remain cheaper today and they were a year ago.
The report says 83 of the nation’s 100 largest cities saw rents go up in April. But on a year-over-year basis, rent growth is positive for only 43 of these cities. Many of the steepest year-over-year declines remain concentrated in Sun Belt cities that are rapidly expanding their multifamily inventory, such as Austin (-7.4 percent year-over-year), Raleigh (-4.4 percent), and Orlando (-3.9 percent).
New apartment supply continues to impact rents
Apartment vacancies continue to rise, and the vacancy index should continue to increase for the rest of the year.
New apartment construction continues at the highest level in 50 years “and an even greater number of new units are expected to come on the market this year. This means that renters should have more available options than they have in some time, especially in the Sun Belt markets where construction activity has been strongest,” the report says.
Conclusion
The report says rent increases are currently being moderated by a robust construction pipeline expected to deliver a decades-high number of new apartment units in 2024. Improving consumer sentiment about broader macroeconomic conditions may be driving a modest rebound in rental demand, but that bounce back has so far been outweighed by the impact of incoming supply.
Read the full report here
