Occupancy rates across the nation have been falling steadily for nearly two years after peaking in the fall of 2021. Some of the hardest hit markets include popular sunbelt markets with significant new development. Las Vegas, Atlanta, Phoenix and Salt Lake City have all seen their apartment fundamentals deteriorate in recent months, most notably occupancy and net effective rent.
Through many real estate cycles Las Vegas has stood out as a boom-and-bust market, riding some of the highest highs when the economy is favorable, but also retreating quickly when economic conditions deteriorate.
Economists will be focused this week on monetary policy as well as the first release of Q2 GDP. The Fed will meet on Tuesday and Wednesday, and while most forecasters anticipate another 25-basis point increase in interest rates, expectations are mixed on whether or not the Federal Open Markets Committee will raise interest rates again after this week.
Revenue per available unit (RevPAU) is the most comprehensive single statistic to assess apartment performance over time. Taking into account both net effective rent and occupancy, RevPAU provides the most concise view of earning potential at a given property.
Houston remains one of the fastest growing cities in the nation, as population and migration growth continue to expand the market. However, for several years, the Space City is and has been one of the most popular markets for new apartment development.
Many apartment fundamentals have varied across markets, as traffic remains strong in sunbelt markets, while NER growth remains positive in some Gateway and small southwestern markets.
The June consumer price index showed weaker inflation than economists estimated, with prices rising 20 basis points month-over-month. On an annual basis the CPI increased 3.0%.
The June jobs report showed continued steady growth, as 209,000 new jobs were created, and the unemployment rate fell 10 basis points to 3.6%.
First half net effective rent cooled from last year, as the average property nationwide has posted a two percent rent increase thus far in 2023.
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