Nationwide rents increased another 0.5 percent in April, but even as the busy season picks up, rent growth is coming in slower than in previous years, Apartment List says in their May report.
“When prices skyrocketed during the pandemic, April rent growth clocked in at 1.1 percent in 2022 and 1.7 percent in 2021. And even before the pandemic, April rent growth was higher than it is today. Of course, regional variation exists, but the national numbers speak to a continued, broad cooldown of the rental market.,” the report says.
While April was the third straight month showing some rent increases, a combination of sluggish demand and increasing supply is keeping rent growth in check.
Year-Over-Year Rent Growth
Year-over-year rent growth is continuing to decelerate, and now stands at 1.7 percent, its lowest level since March 2021.
Year-over-year growth is now below the average rate from 2018 to 2019 (2.8 percent), and it is likely to decline even further in the months ahead.
What Is Happening On The Supply Side?
On the supply side, “our vacancy index currently stands at 6.8 percent, surpassing the average pre-pandemic rate and continuing to trend upward.
“With a record number of multi-family apartment units currently under construction, some property owners may start struggling to fill vacancies for the first time since the early stages of the pandemic,” Apartment List economists write in the report.
What Is Happening In The Largest Cities?
Rents increased in April in 69 of the nation’s 100 largest cities, down from 83 cities that saw prices rise last month.
At the same time, 40 of the top 100 cities are currently logging negative year-over-year growth up sharply from 28 cities last month. New York City saw the nation’s sharpest month-over-month increase, with prices there up by 1.9 percent in April.
Midwestern markets have seen the fastest rent growth over the past year
At the metro level, the fastest rent growth over the past 12 months has been occurring in the Midwest.
The following table shows the ten metropolitan areas that have experienced the fastest rent growth over the past six months, over the past year, and over the past three years.
April’s 0.5 percent increase “represents a slightly slower rate of growth than we saw last month, indicating that the market remains sluggish even as rents continue on an upward trajectory. Year-over-year growth fell again to 1.7 percent – putting it solidly below the pre-pandemic average from 2018 to 2019 – and will likely decelerate even further in the months ahead. And even if demand rebounds over the summer, a strong construction pipeline should temper rent growth for the remainder of the year. Prices may not fall further, but they are also unlikely to increase significantly.”