Multifamily Rents Decline in October 2023

On November 14, 2023, Yardi Matrix published its National Multifamily Report for October 2023, assessing the state of rent costs across the USA.

Rent costs, particularly for multifamily units, are inextricably linked to homebuyer behavior. If rents are affordable then there’s less incentive for a family to buy a house.

Key findings:

  • The average U.S. asking rent dropped $3 to $1,718 in October, with year-over-year growth moderating to 0.4%, down 40 basis points from September. Occupancy slid to 94.9%, marking the first decline in four months.
  • Rent growth turned negative in 14 of Yardi Matrix’s top 30 metros; the report suggests these markets were negatively impacted by a recent influx of supply and rapid rent increases over the past two and a half years.
  • Demand and absorption continue at levels consistent with pre-pandemic years. During the first three quarters of 2023, more than 250,000 units were absorbed nationally, in line with the 300,000-plus units absorbed annually between 2017 and 2020.
  • Asking rents declined in the Lifestyle property segment, down 0.4% in October, while Renter-by-Necessity rents remained flat.
  • Single-family rental rates fell $2 in October to $2,121, up 1% year-over-year, down 30 basis points from September. 
  • Operators are focusing on reducing operating costs, as expenses rose 12.2% on a trailing 12-month basis through September.

The report’s summative conclusion is as follows: 

“While the economy continues to produce solid results, market attention is focusing on the seeming inevitability of slowing job growth and the capital markets conundrum of higher interest rates. The longer rates stay in the 4.5 % to 5 % range (or higher), the more multifamily properties will face capital gaps when loans come up for refinancing.”

For the full report, click here.

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