Rent prices continued to rise in June but overall rent increases remain modest, Apartment List says in its July report.
While there have been five straight months now of rent increases, the national median rent increased by 0.4% in June and now stands at $1,411 as the pace of growth has slowed in what is typically the busy season.
“We are currently in the midst of what is typically the busy season for the rental market, but this year’s peak season is not bringing elevated rent growth,” the report says.
While rent growth has slowed, the national median rent is still more than $200 per month higher than it was just a few years ago.
Rental market headed for a slow summer
“This is typically the time of year when rent growth is accelerating amid the busy moving season, so sluggish growth this month indicates that the market is headed for another slow summer,” the report says.
The report says 80 of the nation’s 100 largest cities saw rents go up in May. But on a year-over-year basis, rent growth is positive for only 46 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 (-5.2 percent), and Jacksonville (-4.1 percent).
Apartment vacancies remain elevated
Apartment vacancies have been opening up steadily for more than two years.
“As of June, our vacancy index sits at 6.7 percent, the highest reading since August 2020. And there’s good reason to expect that it could rise even further during the remainder of the year,” the report says.
The report says that despite a recent slowdown in new permits being issued and new construction projects breaking ground, the number of multifamily units under construction remains near record levels. In 2023 the most new apartments were completed in more than 30 years, and an even greater number of new units are expected to come on the market this year.
Conclusion
The report’s summary says despite a small June increase, rent growth is slowing down at the time of year when the rental market activity is normally approaching its apex.
“Year-over-year rent growth is also indicative of a sluggish market, remaining negative at -0.7 percent. 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.”
Rent Prices Up Slightly For 4th Month, but Vacancies High
