Apartment rents are likely to continue on a moderate downward trend through the end of the year, following a second consecutive month-over-month decrease, as the rental market is now firmly in its off-season. Vacancy rates are also at an all-time high, confirming ongoing sluggishness in the multifamily rental market.
According to Apartment List, rents fell 0.4% in September to $1,394, down $11 per month compared to September 2024. That represents a 0.8% year-over-year decline and puts rents below the August 2022 peak by $48 per month. However, rent prices remain about 22% higher than they were in January 2021.
Monthly rent growth peaked at 0.6% in March but then began a gradual downward trend over the summer, when rents typically increase the fastest during peak moving months. This year is also the third in a row that month-over-month rent growth flipped negative in August, which is earlier than the pre-pandemic norm.
Vacancy continues to rise as the market works to absorb a record wave of new deliveries, reaching 7.1% in September. More than 600,000 units hit the market last year, the most new supply in a single year since 1986, the report said. The market is past the peak of that supply wave, but the construction pipeline remains active, with 243,000 units completed during the first half of this year and 686,000 units still under construction.
“As the supply wave continues to recede, these occupancy and pricing trends should begin to gradually shift,” said Apartment List. “But for now, the market is still absorbing a swell of new units, and with the labor market and broader macroeconomic indicators starting to look shakier, it could be a bit longer before rental market conditions tighten.”
Rents declined in 44 of the nation’s 54 large metro areas with a population over 1 million, up from 25 markets at the same time last year. Year-over-year declines are concentrated in the South and Mountain West regions, with Austin posting the sharpest decline of 6.5% over the past year. Austin, along with markets like Denver, Phoenix, San Antonio, Orlando and Dallas, all are absorbing significant new supply and seeing rents fall as a result.
Meanwhile, rents grew fastest in the San Francisco metro area, with a 4.9% increase from last year, and the city of San Francisco posted a 12.4% year-over-year increase in apartment rents. Midwestern markets like Chicago and Minneapolis, and East Coast markets like Providence, Rhode Island, and Virginia Beach, Virginia, were also among the fastest-growing markets for rent in September.
Time on market is increasing under these conditions, with the average apartment waiting 31 days to be leased in September, up from 29 days in August but down from a peak of 37 days in January. Although this is in line with the transition to negative rent growth in the market’s off-season, the length of time units are sitting is a bit longer than typical for this time of year.
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