Multifamily Rents Rise Ahead of Spring

The multifamily rental market recently stabilized as housing market challenges persist, seeing its first price rise in seven months.

Yardi’s latest National Multifamily Report for February found that multifamily rents rose slightly by $1 to $1,713, while year-over-year growth was unchanged at 0.6%. The Northeast and Midwest continue to outperform over the short term, led by New York City. At 5.4%, the Big Apple not only leads major metros in rent growth over the last year but at 0.6% also was the top performer during the month of February.

In the case of the single-family rental market, rents slipped slightly, but fundamentals remain strong. Average single-family rents fell $2 in February to $2,133, while year-over-year growth fell 50 basis points to 1.2%. Rent growth was led by Boston, Raleigh and Orange County.

Key highlights:

  • Rent growth continues to be highest in the Northeast and Midwest, led by New York City (5.4% year-over-year), New Jersey (3.8%), Columbus (3.6%), Kansas City (3.3%) and Chicago (3.1%). 
  • Negative rent growth is intensifying in an increasing number of metros, as five of Matrix’s top 30 markets are down by 3.0% or more year-over-year. Austin posted the largest decline, at 6.2%, a consequence of the influx of supply in the metro and across the Sun Belt.
  • The national occupancy rate was 94.5% in February, slightly down from the previous month and down 60 basis points year-over-year. 
  • Occupancy rates are either down or flat year-over-year in all but San Francisco (0.1%). Three Matrix top 30 markets are down by 1.0% or more: Atlanta (-1.2%), Indianapolis (-1.2%) and Austin (-1.0%).
  • Rents rose 0.1% month-over-month in the Renter-by-Necessity (RBN) segment and were unchanged in the luxury Lifestyle segment.
  • Rent growth was negative in 13 of the top 30 metros in Lifestyle and eight of the top 30 in RBN. Monthly rent gains were led by New York (0.6%), Miami (0.3%) and Chicago (0.2%).
  • The most significant declines in both segments were recorded in Austin (down 0.6% in Lifestyle and 0.4% in RBN) and Raleigh (down 0.5% in Lifestyle and 0.4% in RBN). All other markets either were unchanged or posted a modest change.
  • Renewal rents fell to 4.6% nationally year-over-year in January, down 20 basis points from December. Boston had the highest renewal rent growth (9.5%), followed by Miami (8.3%) and Kansas City (8.0%). Only two metros had negative renewal rent growth: Austin (-1.2%) and New York (-1.0%). Interestingly, Austin also had the greatest decline in asking rent, while New York had the largest increase.
  • The national lease renewal rate averaged 64.8% in January. This is the first time that the national renewal rate has fallen below 65.0% since July 2021, as the range for the last six months has been between 65.4% and 66.8%. Lease renewal rates were highest in New Jersey (82.2%) and lowest in Los Angeles (45.3%).
  • Nationally, asking rates for single-family rentals declined $2 in February to $2,133, while year-over-year growth fell 50 basis points to 1.2%.
  • Single-family occupancy rates were unchanged in January at 95.6%. Occupancy is 97.3% at RBN properties and 95.2% for Lifestyle units.

Major takeaway:

“After being the darlings of multifamily investors for more than a decade, markets in the Sun Belt and Southwest have felt significantly cooled sentiment in recent months, as the heavy delivery pipeline has eroded rent growth,” the report stated. “Investors are concerned that the region’s heavy supply pipeline damages prospects for near-term rent growth.”

“(However), demand remains strong in high-supply markets, driven by economic and population growth. In 2023, absorption was strong nationally, led at the metro level by the same Sun Belt markets with high-supply growth,” continued the report.

The report concluded, “Economic and population growth is the lifeblood of multifamily. While high-demand markets are likely to record weak rent growth over the next year or two, the seeds of a rebound have been planted, as starts are declining and deliveries will drop in 2026 and 2027. In any event, multifamily almost always works best as a medium- to longterm investment strategy.”

For the full report, click here.

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