The Northeast stands apart from much of the nation in experiencing apartment rent growth in recent months, giving the region its biggest lead over the rest of the country in more than a decade.
Data from RealPage shows Northeast average effective asking rents were up 3.1% in September 2023 from their level in September 2022, compared to an average increase of just 0.1% nationally – a 300 bps difference. Despite the discrepancy, the RealPage report says the 3.1% rent growth is actually less than the 10-year average of about 3.5% in the Northeast.
"This nation-leading performance is less about big hikes in the Northeast and more about the loss of rents in other regions nationwide, due to supply pressure deflating pricing power," the report stated.
Historically, landlords in the region – already one of the most expensive rental markets in the country — do not raise rents as much as their counterparts in other places such as the South and West. Since 2013, rent growth in the Northeast has been consistently below or briefly equivalent to the national rate. But in September 2022 it began to move ahead as the national rate fell. Rent growth is also happening in the Midwest.
Another factor is that much of the nation has seen a 2.1% surge in multifamily construction, according to a separate RealPage report. However, inventory growth in the Northeast has been much more modest, with only two of the top 10 rent growth markets achieving anything close to this level of growth – 1.9% in Portland, ME as well as Newark-Jersey City.
Some smaller Northeastern markets did see higher rent increases. Springfield, MA, which had no increase in apartment supply, saw rents rise 8.7%. Rents in Rochester, NY, with a 0.3% increase in inventory, rose 5.5%.
"The link between new apartment completions and pricing power becomes clear," RealPage commented.
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