Apartment Rents Continue to Fall in January While Vacancies Rise

Apartment rents dipped again in January, dropping by 0.3 percent and marking the fifth consecutive month-over-month decline.

The downturn was widely dispersed across the US, according to Apartment List, with rents decreasing in 67 of the nation’s 100 largest cities. The decline was sharpest in Newark, where prices were down by 2.3 percent month-over-month, while San Francisco, New York City, Seattle, and Washington, D.C. all posted monthly declines of more than double the national rate.

While January’s dip was more moderate than the declines Apartment List observed from October to December, the decline “was still sharper than the usual seasonal trend, signaling the continuation of a broader cooldown in market conditions,” the firm notes in a report breaking down the data. And over the past six months as a whole, no large metro in the country has experienced positive rent growth.

“The recent dip suggests that we have entered a new phase of the rental market rollercoaster, with changing economic conditions now relaxing rental demand just as supply constraints are easing,” Apartment List analysts note. “That said, the fact that these rent declines are already moderating suggests that we shouldn’t expect rents to continue falling indefinitely. The current seasonal downtown may last a bit longer than usual, but it’s likely that we’ll see a return to positive rent growth once moving activity picks back up in the spring and summer months.”

Year-over-year rent growth is at 3.3 percent, its lowest level since April 2021, and year-over-year growth is now pacing just slightly ahead of the average rate from 2018 to 2019.

Supply is also easing with the vacancy index coming in at 6.1 percent — the first time it cracked 6% since Spring of 2021, the report said. But “with a record number of multi-family apartment units currently under construction, we expect that supply constraints will continue to soften,” Apartment List analysts note. “2023 could be the first time in years that we see property owners competing for renters, rather than the other way around.”