Apartment Rents to Remain Flat for the Rest of the Year

The apartment market is expected to cool now that summer’s activity is past, MRI Real Estate Software’s latest report suggests, similar to what happened in 2019, before the pandemic emerged. Fall is generally a slower time for the country’s multifamily market and based on some key indicators on a year-to-date basis, it finds much in common with pre-pandemic trends. 

When it comes to lease and renewal pricing, rental rates hit a season’s peak in August with a dollar increase from July, a sign it was the top of the market for the year. But that August value also was a less than 1% increase (65 basis points) over the prior year. The report concludes that the multifamily market is therefore moving closer to pre-pandemic seasonal patterns with rent growth stalling.

Another new development: lease averages now include concessions with the dollar value at double pre-pandemic rates. As rental rates spiked, concession values increased in sync. Prior to the pandemic, it was common for renewal prices to exceed lease prices but since the pandemic, renewal rates have lagged new lease rates. This past August, these two rates were close, just 1% apart. The report predicts these values will remain in relative lockstep through year-end as new lease prices soften and renewals hold.

Move-in and move-out volumes continue to reveal greater aligned movement, also similar to 2019 with 2023 patterns “looking more like 2019 than any year in between.” And for new lease terms, 14-month lease terms peaked in March at 7.9% while the 11-month term waned through May with a low of 2.2% of leases. But by August the relative popularity had switched with 11-month terms being 8.9% and the 14-month term at 2.9%. The strategy typically entices applicants with better lease rates to drive expirations to anticipated higher prices in the summer season.

On the renewal front, 12-month terms have remained consistent at about 60% of renewals with month-to-month terms being popular but showing a decline in volume over the last year. At 13.3%, August represents the lowest share of month-to-month leases.