SANTA BARBARA, CA—For the first time in nearly a year, the average US apartment rent fell in September, according to Yardi Matrix's monthly survey, released Tuesday. The $1 drop from $1,220 to $1,219 per month, while hardly dramatic, is in keeping with a slowdown in year-over-year rent growth.

The monthly survey of 123 multifamily markets revealed that rents grew 4.7% nationwide in September on an annual basis, a 30-basis-point decline from August and a 200-bp fall from the recent high in October 2015. “Rent growth has significantly outpaced economic expansion and wage growth in the last three years, and the recent deceleration aligns with historical rent growth rates,” according to the Yardi Matrix report.

Even as rent growth begins to taper, multifamily fundamentals remain strong, according to the Yardi Matrix report. “Occupancy has remained unchanged since May and is staying near historic highs. The employment sector, while not as robust as it once was, has been creating jobs at a steady pace.”

Longer term, Yardi Matrix is forecasting continued high demand for multifamily housing, “as Millennial household formation continues and Boomers seek to downsize and re-enter the rental market.” Jeff Adler, VP of Yardi Matrix, will be among the industry experts discussing the macroeconomic drivers of unit demand at RealShare Apartments, scheduled for Oct. 19 and 20 at the Westin Bonaventure in Los Angeles.

And deceleration trends notwithstanding, 26 of Yardi Matrix's top 30 markets experienced year-over-year rent growth of 3% or better in September. Sacramento once again posted the best results, with Y-O-Y increases of 11.1%, followed by the Inland Empire and Seattle, both with 9% annual growth.

The Yardi Matrix report notes that completions of new apartment units are projected to reach 360,000 in 2016, representing the largest number of annual completions in the current cycle. “New supply, coupled with slower albeit strong and steady macroeconomic fundamentals, will maintain a downward pressure on rent growth,” the report states.

In particular, significant supply increases are occurring in San Francisco, Denver and Houston, all of which saw Y-O-Y rent growth of 2% or less in September. “As supply is absorbed and construction moderates, these metros will likely revert back to a stable long-term growth rate,” according to Yardi Matrix. Click here for the complete report.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

Instant Insights /

Average Rent Sees Slight Drop; Apt. Occupancy Stays Strong

Related Stories

Recommended For You