Read the latest Yardi Matrix National Multifamily Market Report.
Rents fall for the fifth straight month, down $4 to $1,709 in December; rent growth ends the year at 0.3%.
Report highlights:
- Year-over-year rent growth stood at 0.3% in December; absorption totals 285,000 units in 2023 through November.
- Despite the slowdown, demand remained healthy, sustained by household formation, strong job market and rebounding immigration.
- Rents declined across property segments—Lifestyle down 0.2%, Renter-by-Necessity slid 0.1%.
- Single-family rents increased 1.2% year-over-year in December, to $2,123.
Rents continue downfall, economy sustains demand
The average U.S. multifamily asking rent ended 2023 with a 0.3% increase year-over-year to $1,709 in December, declining for the fifth consecutive month, down $4 from November. The annual rent performance was the weakest since 2010, excluding the 0.1% gain registered in pandemic year 2020. Yet, while rent growth is likely to remain tepid in the near term, demand endures sustained by household formation, strong job market and immigration. Net immigration has increased by more than 1 million annually in the last two years and is projected to maintain level in the coming years. Absorption volume was in line with recent years when rent increased substantially, staying healthy across the U.S., including in markets with high supply volumes such as Austin, Orlando, Phoenix, Dallas and Nashville.
Rent growth remained highest in the Northeast and Midwest, led by New York City (5.9% year-over-year), New Jersey (4.2%), Columbus (3.8%), Kansas City (3.3%) and Chicago (3.1%). Furthermore, five of Yardi Matrix’s top 30 markets posted rent contractions of 3.0% or more year-over-year. Austin rents recorded the largest decline, down 5.7%, heavily impacted by recent deliveries. Meanwhile, national occupancy stood at 94.8% in November, unchanged from the previous month. Still, the rate rose in just five markets: Chicago and Seattle (0.2% year-over-year), Denver, Washington, D.C., and the Twin Cities (each 0.1%). Atlanta marked still the largest decline (down 1.3%).
Rents remain negative in both asset classes
On a monthly basis, national rents dropped 0.2% in the Lifestyle segment and 0.1% in the Renter-by-Necessity component. Rents contracted in 22 of Yardi Matrix’s top 30 metros in Lifestyle and 21 in the RBN segment. The largest declines across segments were registered in Nashville (down 0.9% in Lifestyle and 1.2% in RBN) and Orlando (down 0.9% in both Lifestyle and RBN). Overall monthly rents increased in just six metros, led by Columbus (0.5%), New York City (0.4%) and Atlanta (0.3%). Areas with high volumes of deliveries continued to register declines in rent and occupancy, with examples including Austin, Miami and Charlotte.
Renewal rent growth reflected the asking rent growth slowdown, rising just 5.2% year-over-year in October, 80 basis points below September’s rate. Las Vegas stands out as the metro with the highest renewal rent growth (12.4%), while posting negative asking rent growth. Bottom ranking metros for this metric were Phoenix (1.0%) and Austin (2.9%). The national lease renewal rate remained at 64.4% in October, with New Jersey posting the highest rate (90.8%) and Los Angeles the lowest (45.3%).
SFRs outperform multifamily
Single-family rents slid $1 in December to $2,123, for a 1.2% year-over-year increase, 20 basis points higher than the November rate. Occupancy rose 10 basis points year-over-year to 95.8% in November. Sustained by the high home prices and mortgage rates, demand for SFRs remained strong. This has led to the creation of legislative bills at the state and national levels, aiming to stop institutions from purchasing single-family rentals. Yet, institutions own less than 1% of single-family homes and less than 5% of SFRs, hence these bills would have little effect on pricing, should they pass.
Read the full Matrix Multifamily National Report-December 2023.
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