Rent and Operating Trends Week of November 27th

After a short and quiet Thanksgiving week, economic data releases return in full force with a number of metrics set to be shared this week. GDP and November employment data will likely dominate the headlines, but the Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, will be announced. As the year winds to a close, the Fed will have one more policy setting meeting in mid-December, and recent reports have indicated some willingness to slow down the pace of interest rate increases. The equity and bond markets have priced this news in with major stock indices rising in recent weeks. Longer term treasury yields have also fallen, with the 10-year yield coming down 50 basis points since November 7th. The Fed will not stop their interest rate increases until inflation falls significantly, however by slowing the pace of increases they are hoping not to overshoot an interest rate level that allows for neutral growth.

Multifamily fundamentals continued their slow downward grind as the end of 2022 approaches. Traffic fell slightly last week, although given the Thanksgiving holiday, the modest decline in traffic was better than expected. Occupancy and leased percentages continued to soften in almost all major metros and rents slipped again. The national average rent is now down more than $60 from its peak in late July.