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Economic Indicators Softening, While Multifamily Metrics Remain Stable

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Economic Indicators Softening, While Multifamily Metrics Remain Stable

Picture of Chris Nebenzahl

Chris Nebenzahl

The U.S. economy is starting to flash warning signs of a slowdown that many predicted would come sooner. Q2 GDP was revised downward last week to an annualized pace of 1.3%, 30 basis points below the first estimate in April and more than 200 basis points below the pace of growth from Q1. Key manufacturing indicators are also pointing to a slowdown in the U.S. Later this week we will get the May employment report which should give us a good indication of whether the weak report in April was an anomaly, or the beginning of a larger trend.

Multifamily indicators were mixed last week, and mostly flat for the month of May. Traffic and leasing have remained unchanged for the past few weeks, and I believe we have seen the peak for both leading indicators this year at the national level. Rent growth and occupancy continue to improve as they dig out from the now two-year slumps.

Key Takeaways – Data as of 06/02/2024

Traffic and Leases:

  • For the third consecutive week, traffic and leasing have remained unchanged at 8.2 and 2.7 respectively. The 33% conversion ratio is in line with historical standards, but the overall number of tours and leases signed remains lower than normal.
  • Smaller markets including Salt Lake City, Baltimore, and Chattanooga led the weekly growth in traffic. Also among the top 5 was Austin, a market that is not only been suffering from oversupply but had previously been experiencing weak demand as well. However, Austin’s traffic is up by roughly 2.5 tours per property year-to-date and recently passed the national average. We are focusing on Austin in this week’s Market Spotlight webinar and for more information on the Texas capital, here: Webinar Registration – Zoom.


Occupancy and ATR:

  • Nationwide occupancy increased two basis points to 93.97%. In the current era of hyper-supply, a national occupancy rate of 94% indicates the strong continued demand for housing.
  • Persistently high mortgage rates on for sales homes have also buffered multifamily demand, as more would be home buyers remain renters, at least for now.
  • The southeast continues to add occupancy as Memphis, Midland, TX, Wilmington, NC and Huntsville led the nation in occupancy growth last week. Each market added at least 18 basis points to their market occupancy rate.
  • Another strong indication of demand in light of supply is the average number of units available to rent per property. The national average ATR of 13 marks a 30% improvement from a year ago.


Net Effective Rent:

  • Net effective rents ticked up 10 basis points nationwide last week, bringing the average NER to $1,820.
  • Not only was Wilmington, NC among the leaders in occupancy growth, but it led the nation with rents rising 80 basis points last week alone.
  • San Jose has quietly put together a strong year from a rent growth perspective. The South Bay Area metro saw rents increase 70 basis points last week, bringing its annual rent growth to 3.1%. It’s now the third fastest growing market on an annual basis. San Jose leads San Francisco by a meaningful margin in nearly all metrics. Traffic and leasing are both nearly double the rate in San Jose compared to San Francisco. Occupancy is 120 basis points higher, and rent growth is 3.1% compared to negative 2.3% in San Francisco, year-over-year.


Revenue Per Available Unit:

  • RevPAU had a strong week, led by Wilmington, NC to no surprise.
  • Perhaps more impressive than any one market is the fact that 31 of the 45 metros tracked by Radix Research registered RevPAU growth last week. 18 of the 45 metros have seen RevPAU growth on an annual basis.
  • Our most recent forecast predicts revenue growth to return to positive territory nationwide in the second half of next year, another indicator that owners and operators who are able to survive until 2025 will begin to see steady improvements in the intermediate term.

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Picture of Chris Nebenzahl
Chris Nebenzahl
Chris Nebenzahl is the Director of Economic Research at Radix, where he oversees all macroeconomic and multifamily market analysis. Chris has 15 years of multifamily experience in data analytics, research, asset management and acquisitions. Prior to his time in the multifamily industry Chris was a portfolio manager at Bank of New York, focusing in the government and commercial fixed income sectors.
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