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Rents and Occupancy Accelerate In Early May

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Rents and Occupancy Accelerate In Early May

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Chris Nebenzahl

New jobless claims rose to their highest level since August last week, as more than 230,000 people filed a new unemployment claim. While the increase in unemployment claims, paired with the slowdown in job creation in April may appear alarming, the employment market remains in a solid position. The Consumer Price Index comes out on Wednesday and will provide further information on the state of inflation in the U.S. economy.

Rent and occupancy both posted strong gains last week, as the key performance metrics show signs of life at the midway point of May. National occupancy added 3 basis points and is only down 26 basis points from a year ago. Net effective rents increased 20 basis points last week, and the annual decline improved to 150 basis points. The leading indicators, including traffic and leasing were mostly flat last week.

Key Takeaways – Data as of 05/12/2024

Traffic and Leases:

  • Nationwide traffic fell slightly, and the average property is seeing 8.3 tours per week. The number of leases signed remained unchanged last week at 2.6, bringing the national conversion ratio to 31%.
  • Colorado Springs led all markets, adding 0.7 tours per property last week alone. The small southwestern metro has been performing well in recent weeks and its traffic now exceeds the national average. Greenville, SC, and Phoenix also had strong traffic weeks last week, adding more than a half tour per property.
  • Leasing accelerated the fastest in another small southwestern MSA, Tucson. The metro added a half lease per property compared to the week before and now averages 3 new leases signed per property per week. With a conversion ratio of 54%, Tucson is also the most efficient leasing market in the country.

Occupancy and ATR:

  • The national occupancy rate continues to grow steadily, nearing 94%. After a dramatic and continued decline beginning in the fall of 2021 and carrying through the end of last year, national occupancy has increased consistently through the first four and a half months of 2024.
  • Highlighting the trend is Las Vegas. Last week, Las Vegas’ occupancy increased 31 basis points, bringing its annual occupancy growth to 1.01%. Las Vegas multifamily performance eroded quickly as interest rates increased and demand for housing dried up. Yet the market has bounced back well, with strong occupancy growth and modest but steady rent growth.
  • As demand remains elevated and occupancy recovers, 8 markets nationwide now boast average occupancy above 95%. 12 markets have seen occupancy increase over the past year.


Net Effective Rent:

  • NRents increased nationwide by 20 basis points last week, and the average net effective rent is $1,816.
  • Nashville led all markets as rents jumped 2.1% last week alone. The market’s average net effective rent remains 4.5% below its level from this time last year, but the recent gains in Nashville are bringing optimism back to the Music City.
  • New York also had a great week from a rent perspective. Net effective rents grew 1.4%, bringing the average rent in New York to $4,138.
  • Rents increased across bedroom type last week, except for the three-bedroom floorplans. However, the largest floorplans continue to outperform on an annual basis. Three-bedroom unit rents are down 60 basis points over the past year, compared to studio units, where rents have dropped 210 basis points. There is a consistent pattern in unit size and rent growth. The smaller the unit, the weaker the annual rent performance has been at the national level.


Revenue Per Available Unit:

  • RevPAU also had a strong week as rent and occupancy increased. Nationwide RevPAU grew 20 basis points, led by the same markets with the fastest rent growth, Nashville, and New York.
  • Riverside and Columbus had the weakest RevPAU performance last week, as each metro saw declines of more than 1%. Both metros have performed well in recent months so we will keep an eye on these markets to see if last week’s drops were an anomaly or the beginning of a trend.
  • 28 of the 45 markets tracked by Radix Research saw RevPAU increase last week, as the prime rental season continues across much of the country.

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