The U.S. saw a second consecutive month of negative rent growth in September, according to the October report from Apartment List.
The nationwide median rent fell 0.5 percent to $1,364 and “we are now squarely in the rental market’s slow season,” the report says.
“Annual rent growth remains at -1.2 percent, meaning that on average, apartments across the country are 1.2 percent cheaper today than they were one year ago. This is a major deceleration from recent years, when annual rent growth neared 18 percent nationally and soared to over 40 percent in a handful of popular cities, the Apartment List Research Team writes.
Rent Cool Down Is Widespread
Negative rent growth continued as rents fell month-over-month in September in 85 of the nation’s 100 largest cities, and thanks to sluggish rent growth over the past 12 months, prices are down year-over-year in 71 of these 100 cities.
As the Consumer Price Index housing component now gradually “begins to reflect the cooldown that we’ve long been reporting, it will help to further curb topline inflation in the months ahead.”
Apartment vacancies are back above pre-pandemic levels
Apartment vacancies have increased for 23 consecutive months, and in September the index hit 6.4 percent, reaching pre-pandemic levels and approaching the pandemic peak set in 2020. There is still a good chance that the vacancy rate will continue trending upward in the months ahead.
“New apartment construction is recovering from pandemic-related disruptions, and there are now more multifamily units under construction than at any point since 1970. As this new inventory continues to hit the market over the remainder of this year and into next, we are now entering a phase in which property owners are beginning to compete for renters to fill their units, a marked change from the prevailing conditions of the past two years, in which renters had been competing for a limited supply of available inventory,” the Apartment List research team write.
September’s 0.5 percent rent decline puts us squarely in the rental market’s slow season, and keeps year-over-year rent growth at a low -1.2 percent. As apartment demand wanes throughout the remainder of the year, and apartment supply improves through a strong construction pipeline, expect rent growth to cool further for the remainder of the year.