Nationwide Apartment Rents See Negative Growth In October
US multifamily rents declined an average of $4 in October to $1,358 per month, according to Yardi Matrix’s latest monthly survey of 121 markets.
Year-over-year rent growth continued to decelerate, with October’s 2.3% nationwide improvement off 30 basis points from September’s annual increase, and trailing three-month growth turned negative. That being the case, there were some clear winners among individual markets, including Houston in the aftermath of Hurricane Harvey.
Additionally, the Yardi Matrix report notes that October’s drop on a national level isn’t surprising, coming at the start of the traditionally slow fourth quarter. And nationally, rents are down just $5 per month from their all-time peak set this past August, and are $30 above the year-ago level.
Sacramento’s continued ranking atop the roster of the 30 leading metro areas for rent growth isn’t surprising, either, although the performance of other markets points to a changing picture. Second-ranked Las Vegas vaulted upward from 13th place the previous month and knocked #2 market Seattle down to sixth place.
In fact, according to the Yardi Matrix report, “the entire Pacific Northwest is showing signs of weakness. The region was consistently among the top in rent growth through much of the current cycle, but is now a prime example of the deceleration caused in large part by heavy construction of luxury supply.”
Another market which has been mentioned in connection with sizable construction pipelines, Houston got a lift in October, albeit from short supply due to Harvey. Rent growth in Texas’ largest city is up 0.8% Y-O-Y through October, a 100-bp improvement over negative 0.2% in September and the metro area’s first positive month since July 2016. Yardi Matrix notes that upward of 45,000 apartment units and 100,000 housing units went out of service amid the flooding that engulfed the area after Harvey made landfall.
Houston was also a gainer in terms of T-3 rent growth, with rents up 0.6% during the period. Nationally, though, T-3 growth declined by 0.1% after remaining flat in September, although there were markets which experienced improvements, including Las Vegas (0.5%), Orlando, the Inland Empire and Sacramento (all 0.3%).
Conversely, Yardi Matrix cites a number of markets that experienced strong rent growth through the summer months but posted negative T-3 results for October. Seattle (-0.8%), San Jose (-0.7%) and San Francisco (-0.4%) were among the weakest-performing markets.