Apartments.com Releases Multifamily Rent Growth Report for Second Quarter of 2024
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The
The national average annual asking rent growth dipped slightly to 0.9% in June compared to 1.0% in the four prior months. Since mid-2023, annual rent growth has hovered around 1% after a rapid deceleration in 2021 and 2022. Month-over-month rent growth decelerated to 0.1% after seeing three months in a row of 0.4% growth.
Midwest and Northeast markets have avoided oversupply conditions and tied with solid rent growth of 2.4% over the past four quarters, while markets in the West experienced rent growth of just 0.5% as weak demand and elevated completions have kept rent growth restrained but positive. Meanwhile, continued heavy oversupply conditions in the South have kept annual rent growth at zero.
At 4.9%,
At the opposite end of the scale, rents fell by 5.7% over the past 12 months in
Absorption was led by 4&5-Star units, with just over 123,000 units in the quarter. However, with most new supply aimed at the luxury market, annual asking rent growth remained the weakest in that segment and finished June at 0.2%. This contrasts with mid-priced 3-Star properties, where net absorption increased from 33,000 units in the first quarter to 43,000 units during the second quarter, helping rent growth to accelerate to 1.5%. Improving consumer confidence, lower inflation, and sustained economic expansion helped boost 3-Star demand.
Improving consumer conditions can also be observed in demand for 1&2-Star properties. After two years of negative absorption, the lowest price point finally turned positive in 2024. Households at this price point struggled in 2022 and 2023 with higher housing costs and the elevated costs of everyday items, pushing some to seek alternative housing solutions such as moving in with roommates or returning to the family home. But in 2024, 1&2 Star demand has registered almost 6,000 units.
After completions of multifamily units reached a 40-year record in 2023, the outlook this year is for continued high supply. The multifamily market is projected to add 574,000 units in 2024, which is only a slight pullback from the prior year’s record. Property operations in the second half of 2024 could vary widely depending on the market and the price point. Markets in the South and luxury properties remain most at risk for weakness due to oversupply conditions, while Midwest and Northeast locations and mid-priced 3-star properties could outperform.
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This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that new unit deliveries do not occur when expected, or at all; and the risk that multifamily vacancy rates are not as expected. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the
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