Apartment Rent Growth: Still Positive and Still Decelerating

Are multifamily rents growing or shrinking? According to Apartment List’s latest national rent report, the answer is both.

On the one hand, rent prices are up for the sixth straight month. In July, prices were up 0.2% over June and the national median rent stands at $1,414. On the other, year-over-year rent dipped 0.8% and was in negative territory for a year. And yet, the average rent is more than $200 a month, greater than it was before the huge jump from 2021 to 2022.

The firm also notes that this is the likely end of normal seasonality rental growth for the year, so rent growth could turn flat or negative in August and remain so through the end of 2024. Seasonal declines have been steeper and increases milder since the second half of 2022. Whether this is a temporary change or a permanent one is impossible to know yet.

Apartment List said that it estimates rent growth on a “same-unit approach that controls for compositional changes in the rental stock.” They use previously listed prices for empty apartments as a proxy for transacted prices.

This opens a door to bias because comparisons seem done with listed rents, not effective rents after any concessions or negotiations, which may not show up in public data. They do mention partner properties, which could mean more specific data. However, it would also make the data self-selecting and not necessarily nationally representative.

For example, the year-over-year change in Consumer Price Index rent of primary residence has remained positive since at least 2019. The -0.8% Apartment List figure is bested by the CPI +5.1%. The differences are likely methodological in nature.

The Apartment List vacancy index currently stands at 6.7%. This is the cross between a softening of historically low vacancies in 2021 and the influence of increased new inventory from heavy construction deliveries in 2023 and this year. Construction drove falling rents in Sun Belt markets. The Northeast and Midwest saw positive growth. The fastest year-over-year rent change occurred in these five markets: Honolulu, HI (+6.0%); Louisville, KY (+5.5%); Cleveland, OH (+5.3%); Hartford, CT (+4.0%); and Milwaukee, WI (+3.7%).

The worst were in Austin, TX (-7.4%); Raleigh, NC (-4.4%); Atlanta, GA (-4.4%); Jacksonville, FL (-4.3%); and San Antonio, TX (-3.6%).

According to the analysis, in mid-2022, all of the 100 metros saw positive year-over-year rent increases. Now, rents in 71 of the country’s largest hundred metros went up in May. However, only 52 of them saw year-over-year growth. In 48 of them, median rent is cheaper than a year ago.