In June, the average US multifamily rent rose by $7 to $1,726, with a 1.8% YoY growth. This increase is smaller than May’s, and 3.7% lower than January’s. Despite market resilience, it’s the lowest since 2011, excluding the pandemic year. The national rent rose by $20 (1.2%) in Q2 and $23 (1.4%) in H1 2023, supported by a 1.5 million job growth and weak home sales.
Occupancy rates stabilized at a healthy 95%. Single-family rentals saw a $5 rise in June to $2,103, a 1.3% YoY increase, down 80 basis points from May. Yardi Matrix reshuffled highlighted metros: In come Columbus, Detroit, New Jersey (Central and Northern), Richmond, and San Diego; out go the Inland Empire, Kansas City, Orange County, Sacramento, and San Jose.
A rising number of metros, mainly in the Sun Belt and West, showed negative year-over-year rent growth, with nine of the top 30 affected. New projects cooled demand while fears about multifamily financing proved largely unfounded. Despite this, the Federal Reserve hinted at more interest rate hikes, significantly raising borrowing costs and reshaping the multifamily mortgage market. Policy rates have climbed by 5 percent since spring 2022, slashing transactions and demand. Additionally, Fannie Mae and Freddie Mac aren’t meeting their $75 billion allocations.
In April, national renewal rent growth slightly eased to 8.5 percent YoY from March’s 8.6 percent. Miami, Orlando, Raleigh, and Richmond led with double-digit growth. Renewal rents stayed high in markets like Seattle and Austin, even when initial rents decreased. Meanwhile, national lease renewals slipped to 64.4 percent in April from March’s 65.9 percent. New Jersey had the highest renewal rate at 82.3 percent, highlighting limited options along with over 97 percent occupancy.
Boosted by high home mortgage rates, the single-family rental market continued expanding. In June, average rents in this segment rose by $5 to $2,103, a 1.3 percent yearly increase. Occupancy stood at 95.9 percent, down 30 basis points from the previous year. First-time buyer affordability suffered as Optimal Blue’s 30-year FHA fixed-mortgage rate index reached 6.6 percent in late June—double 2020-2021 levels. The gap between renting and owning exceeded $1,000 per month, per John Burns Real Estate Consulting. Pandemic-constrained home supply remained low; Realtor.com reported 582,000 homes available for purchase in May.