The U.S. economy grew at an annualized rate of 2.9% in the fourth quarter, according to the first read issued last week. While the final number may fluctuate mildly in the next two estimates, the strong fourth quarter indicates that the economy is on steady footing in the face of inflation and other headwinds. After a mild recession in the first two quarters of the year, the U.S. economy grew at a strong and steady clip over the second half of 2022. We are not out of the woods yet, as there is still a decent chance the economy falls into recession at some point this year due to the aggressive monetary tightening and the resulting run up in interest rates, however, with the strong GDP read combined with continued strength in the employment market, I expect a future recession would be modest.
Fed officials will meet later this week to vote on additional interest rate increases. The consensus estimate is for a 25 basis point increase, which would bring the Fed Funds Target Rate to between 4.5% and 4.75%. The 10-year treasury rate has remained relatively flat for the past month, averaging around 3.5%.
Multifamily performance is beginning to show signs of growth, as traffic increased significantly last week. Most other fundamentals were modestly positive or negative, but the strong uptick in traffic should bode well for other indicators in the coming weeks and months. All of our top 30 markets saw traffic rise last week and nationwide, the average increase was 0.7 tours per property.
Key Takeaways – Data as of 01/29/2023
Traffic and Leases:
Net Effective Rent:
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