Demand has held up across the country, report says.
Multifamily rents climbed month over month in March as strong demand offset economic challenges, data from Yardi Matrix’s latest National Multifamily report showed.
The average asking rent increased by $3 last month to $1,706. However, national rent growth declined to 4% annually – the lowest level since rents started an unprecedented rise in April 2021.
“The first quarter produced no gains for multifamily rents for the first time in a decade, but the results come as somewhat of a relief,” Yardi Matrix experts wrote in the report. “Multifamily demand held up well despite the attention given to the Federal Reserve-induced economic slowdown, bank failures, and the deceleration from the outsize rent gains of the last two years. Rents and occupancy are stable as the market heads into the growth season.”
Single-family rent growth rose to $2,079 in March, a $5 gain from the previous month. Year over year, single-family rental rates plunged by 80 basis points to 2.8%. The national occupancy rate was virtually flat during the first quarter, down 10 basis points to 95.1% in March.
“With affordability a growing concern and consumers constrained by high inflation, it is likely that rent growth in 2023 will be modest,” Yardi said. “Yet a multifamily hard landing is not yet in the cards, since household formation is still boosted by the tight job market, high single-family home prices, and mortgage rates are keeping homeownership out of reach for some renters, and consumer balance sheets remain strong (for now). The big question continues to be how the economy will react to sharp interest rate increases.”