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Home Sales Soften, but Rental Housing Demand Remains Strong

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Home Sales Soften, but Rental Housing Demand Remains Strong

Picture of Chris Nebenzahl

Chris Nebenzahl

New home sales reached another low in April, as persistently high mortgage rates cut into for sale housing demand in a meaningful way. However, driven heavily by immigration, continued household formation and aging Millennials, overall housing demand remains strong. Thus, rental demand is elevated, helping to buffer the apartment industry as we begin to approach the end of the current development cycle. While there are still a historically high number of units under construction, with each passing month and each new community delivered, the new supply pressure is starting to ease.

Most apartment metrics were flat last week with the exception of occupancy and units available to rent. Renewals continue to be the highest priority for property operators, as traffic and leasing have shown steady indication that they will trail recent year highs. Rents and occupancy rates will likely oscillate from now until the end of the year. Our recent forecasts released last week point toward year-end national occupancy at 93.9% and annual rent growth of -0.9%.

Key Takeaways – Data as of 05/26/2024

Traffic and Leases:

  • Traffic and leasing were both flat last week at 8.2 tours and 2.7 leases signed per property nationwide.
  • New York led all markets in weekly traffic growth last week, picking up more than a half tour per property compared to the week prior. Despite having one of the weakest conversion ratios in the nation, New York maintains high occupancy and year-over-year net effective rent growth of 2.0%, making it the tenth strongest market for rent growth in the nation.
  • Baltimore and Dallas saw the largest increases in weekly leasing activity. Both metros average more than 3 new leases signed per property each week.


Occupancy and ATR:

  • The nationwide occupancy rate increased 2 basis points to 93.96%.
  • Southeastern markets saw the largest increases in occupancy last week with Jacksonville, Charleston and Columbia, SC gaining at least 12 basis points. Occupancy in all three markets remain below their levels from last year, however recent improvements have elevated their market occupancy rates above 93%.
  • As occupancy has improved, so too has the number of units available to rent. The national average ATR is currently 13, a 27% improvement from a year ago.
  • Western markets Tucson, San Diego and San Francisco saw the largest declines in ATR last week. Despite San Francisco’s rent growth and demand struggles, their availability remains tight. The average property has 10 units available to rent in the next 60 days. Its market occupancy is nearing 95%.


Net Effective Rent:

  • Average net effective rent nationwide was unchanged last week, and the current annual decline is 1.5%.
  • Tampa, Salt Lake City, and Miami led the nation as rents in all three markets increased 50 basis points last week. The rent growth in Tampa and Salt Lake City is a strong indicator of continued demand and the eventual end to the development cycle. Both markets have been among the most active in terms of new construction and as a result, rents are down more than 4% on an annual basis. Salt Lake City rents are down 13% from their peak in 2022, but rents appear to be stabilizing and starting to grow.

Revenue Per Available Unit:

  • Revenue per available unit was also unchanged last week, and the national average RevPAU is $1,708 per month.
  • While the sunbelt led the nation in rent growth last week, Gateway markets Boston and Chicago led the weekly RevPAU rankings. These markets have been among the best performing markets for the past two years, with both rent growth and occupancy leading the nation.
  • Conversely Charleston, Phoenix and Memphis trailed the nation in RevPAU growth this week, and all three markets have negative annual RevPAU performance as well.

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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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