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Despite Soft Jobs Report in April, Employment Market Remains Strong

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Despite Soft Jobs Report in April, Employment Market Remains Strong

Picture of Chris Nebenzahl

Chris Nebenzahl

The employment market softened in April as 175,000 new jobs were added last month. This marks a significant slowdown to the torrid pace set during the prior three months of 2024, but does not warrant huge concern for the state of the economy, at least not yet. The U.S. job market has still added nearly one million jobs so far this year, and even though the decline from March looks sizable, 175,000 new jobs is a healthy gain by historical standards. Unemployment ticked up modestly and wage growth came down, but the overall state of the job market remains very stable. While the Fed’s dual mandate includes optimizing the job market, the slowdown in April alone will not be enough to change the course of monetary policy.

Apartment fundamentals saw steady growth across the board last week, except for net effective rent. Traffic and leasing inched upwards and occupancy continues to rally from its recent bottom in January. The number of units available to rent continues to decline and has dropped nearly 30% in the past year.

Key Takeaways – Data as of 05/05/2024

Traffic and Leases:

  • San Diego, a market that performed well last year but has been in a bit of a slump thus far in 2024, had the largest weekly increase in traffic last week, as the average property added 1.2 tours compared to the week before. The metro is averaging 8.5 tours per property per week, which is slightly above the national average. However, with only 2 leases signed per property per week, the metro has one of the weaker conversion ratios in the nation.
  • 5 metros across the country added a full tour per property last week compared to the end of April, marking a significant jump in traffic. Detroit, Memphis, Midland, TX, and Reno all had strong traffic and leasing weeks last week.

Occupancy and ATR:

  • Nationwide occupancy increased 3 basis points as it nears 94%. ·
  • Small metros once again led the weekly occupancy gains, with Albuquerque leading all markets after it picked up 29 basis points of occupancy last week. Virginia Beach, Huntsville, and Charleston also had strong weeks as occupancy increased by at least 10 basis points in each market.
  • Charleston was the anomaly in South Carolina however, as Greenville and Columbia were at the bottom of our weekly occupancy rankings. Each market’s occupancy rate fell by at least 20 basis points.
  • The average apartment nationwide has 14 units available to rent in the next 60 days. The ATR data continues to improve in most markets. Only 3 metros have higher ATR than they did a year ago.

Net Effective Rent:

  • Net effective rent dipped 10 basis points last week at the national level, as rents softened for the first time since February. I expect this will be a short-term blip as rents will likely rise over the next two months despite the current supply wave and lease up challenges. With that said, 2024 will likely have a muted prime rental season compared to historical averages.
  • There were a few strong performers last week as Riverside rents increased 1.7%. Columbus, OH and Columbia, SC saw rents rise 1.3%.
  • The best performing markets on an annual basis remain small southwestern markets like Midland, Tucson and Albuquerque, and northeast and Midwest gateway markets including Washington, D.C., and Chicago. These markets have all posted year-over-year rent growth above 3%.

Revenue Per Available Unit:

  • Revenue per available unit was flat last week at the national level, as rising occupancy offset falling rents.
  • On an annual basis, RevPAU remains down 1.9%, and 28 of the 45 markets tracked by Radix Research have negative annual RevPAU performance.
  • Austin remains the weakest market in the country. Average net effective rent is down 8.3% and occupancy has fallen 1.2% in the past year. The average Austin occupancy rate is 92.6%.
  • Aside from Austin and San Antonio, the 10 weakest performing markets are all in the southeast, where new supply poses the largest threat to short term apartment performance. Despite the strong demand, apartment markets in Alabama, Georgia, Floria, and Tennessee continue to struggle as occupancy rates reach new lows and rent declines accelerate

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