The national rent index increased by 0.5 percent over the course of March, the second straight monthly increase and a slight acceleration over last month’s pace, Apartment List said in their April report.
The report says 78 of 100 largest cities saw rent increase in March while 28 cities have seen prices fall year-over-year.
“This month’s increase is of a similar magnitude to the typical March price change that we saw in pre-pandemic years. After 2022 closed out with record-setting price declines, it appears that rental demand is rebounding in line with the usual seasonal trend,” the Apartment List research team writes in the report.
However, year-over-year rent growth is continuing to decelerate despite some recent small gains and is expected to continue to decline in coming months.
Meanwhile, on the supply side, “Our vacancy index currently stands at 6.6 percent, which now puts it back in-line with the average pre-pandemic rate.
“With a record number of multifamily apartment units currently under construction, we expect that supply constraints will continue to soften and 2023 could be the first time since the early stages of the pandemic that we see property owners competing for renters, rather than the other way around,” the research team writes.
Rents nationally increase by 0.5 percent month-over-month; prices up 2.6 percent year-over-year
With the 0.5 percent national rent index increase in March, it “marks the second straight month of positive rent growth following a five-month period of prices falling. This month’s increase represents a slight acceleration from the 0.3 percent increase we saw in February.
“The timing of this recent turn is consistent with the usual seasonal trend in the rental market. It’s typical to see prices dip in the fall and early winter as moving activity slows, but things normally begin to pick back up around this time of year, and rent growth then tends to accelerate until the early summer peak,” the report says.
Vacancy index back at pre-pandemic baseline
The report says the vacancy rate now sits at 6.6 percent, exactly matching the average rate from 2018 to 2019. Also, it is like the vacancy rate will surpass that pre-pandemic threshold 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 hits the market over the course of the year, we could begin to see property owners competing for renters to fill their units, a marked change from the prevailing conditions of the past two years, in which renters have been competing for a limited supply of available inventory,” the report says.