Sun Belt Markets Reverse Negative Rent Growth Trend

Following a challenging period marked by negative rent growth in some metro areas, the nation’s Sun Belt market has delivered some encouraging metrics.

Advertised rents increased in Austin, Dallas, Charlotte, Denver, Raleigh and Phoenix in July, according to the most recent Yardi Matrix national multifamily report. Each of these markets previously had recorded negative rent growth attributable to rapid supply and falling occupancy, giving renters plenty of choices.

Overall, 24 of the Yardi Matrix top 30 metros posted rent gains in July. However, the firm said continued high levels of new deliveries over the next 15 to 18 months could present rent growth uncertainty.

Several metros that had been performing well on a year-over-year basis saw rents decline in July and vice versa, said Yardi Matrix. Columbus, for example, had been a top-performing metro for several months – up 2.9% year over year – but saw advertised rents fall 0.4% month over month. Boston and Chicago followed a similar trend. Meanwhile, Austin posted a 0.6% month-over-month increase in July despite declines in rent for much of 2023 and 2024. Raleigh and Phoenix had similar trendlines.

Rent growth has been highest in gateway metros in the East and secondary markets in the Midwest, according to the report. New York City led all markets with 5.2% year-over-year rent growth, followed by Washington, D.C., at 4%, Kansas City at 3.4%, and Columbus and New Jersey both at 2.9%. Metros that struggled with declining rents in July included Austin at -5.7%, Atlanta at -3.3% and Raleigh at -2.8%. Austin, which added 6% to its multifamily stock in the past year, was particularly impacted by high supply.

Only two markets posted year-over-year occupancy increases in July, including Las Vegas, which was up 0.7% to 93.6% and Minneapolis/St. Paul at 95%, an uptick of 0.1%. Indianapolis, Houston, Dallas and Kansas City all had drops in occupancy rates of 0.8%.

Single-family rental markets with high levels of new supply are beginning to feel pressure on rents, including in Orlando, where the average rent fell $19 month-over-month in July to $2,362 and advertised rents are down 1.1% year-over-year. In Savannah, Georgia, average rent fell $24 month-over-month to $2,283 and advertised rents were down 1.5% year over year. And in Huntsville, Alabama, the average rent fell $16 month-over-month to $1,602 and advertised rents were down 1.7% year-over-year.