Apartment Rent Growth Falls Below Expectations for First Half
Half of the top 50 U.S. markets will see rent growth between 2% and 3% this year.
Apartment rent growth has been somewhat slower than expected through the first half of 2024 despite strong demand.
According to RealPage’s Q2 2024 apartment forecast, about half of the top 50 U.S. markets should see annual rent growth between 2% and 3% this year, while about a quarter of markets will have growth between 1% and 2%. Of the total markets, 18% are expected to have rent growth below 1% and in a few areas, rent isn’t expected to grow at all, the report found.
Notably, only Atlanta and Jacksonville are expected to experience rent cuts of 1% or more, said RealPage.
During the second quarter, the U.S. economy added more than half a million jobs, bringing total job creation to more than 1.3 million for the first half based on data from the Bureau of Labor Statistics. RealPage’s employment forecast shows the most significant employment gains are likely to be in New York, Los Angeles, Phoenix and Dallas.
The apartment delivery pipeline is expected to deliver more than 629,000 units this year with 612,000 absorbed. However, supply is expected to drop by about 20% next year to 497,000 units scheduled to be completed and absorption is expected to drop 12%.
Next year should be a different story, the firm predicted. Weaker supply coupled with robust demand and a more favorable economy could push rent growth above 3% for about 40% of the top 50 markets and between 2% and 3% for 55% of markets. Only about 5% of the top 50 markets could record growth below 2% in 2025, said RealPage.