U.S. economic growth is gaining momentum following a very strong initial estimate of Q3 GDP. The broad measure of economic output showed the economy expanding at a 4.9% annual rate, more than double the growth rate from the first half of the year. Despite higher interest rates throughout the quarter, the American consumer continued to spend. Inventory growth also helped push GDP growth higher. The Fed will meet this week, and while GDP and inflation are not directly linked, the rapid growth in economic activity combined with strong consumer activity could encourage the Fed to increase interest rates again.
Oil prices have come down in recent weeks, falling roughly $10 from a recent peak at the end of September. I expect the normalization of oil prices to lead to lower inflation in the coming months. As the U.S. economy continues to stabilize and grow, global risks appear to the be only dark cloud on the horizon at this point. Escalating tensions in the middle east could weigh on the domestic economy, but given the current strength, I do not expect a major economic slowdown.
Apartment fundamentals continued their steady decline last week, with occupancy and rent leading the way. Occupancy fell another 5 basis points and is now firmly below 94% nationwide. Net effective rent fell another 20 basis points last week and nationwide, rents are down $33 from the mid-summer peak. Leading indicators, including traffic and leasing have remained flat.
Key Takeaways – Data as of 10/29/2023
Traffic and Leases:
Occupancy and ATR:
Net Effective Rent:
Revenue Per Available Unit:
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