The U.S. economy continues to show signs of weakness as growth has slowed significantly throughout the first seven months of 2022. By the traditional definition, the economy entered a recession after posting a second consecutive quarter of contracting GDP, according to the initial second quarter estimate released last week. While many economists argue that the economy is not yet in a recession due to the historically low unemployment rate and overall strength of consumer and business balance sheets, there are additional cracks emerging within the domestic economy. Weekly jobless claims have been rising steadily since March, and the average weekly jobless claims figure is roughly 100,000 higher than at its trough 4 months ago. Continued inflation caused by supply chain issues and geopolitical unrest will likely persist at least through the beginning of next year, and I expect a sluggish economy to remain for at least another 6 to 12 months.
Multifamily fundamentals are softening along with the weakening economy. NER nationwide was unchanged last week, the first time in months that we did not record a weekly increase in national rents. Annual rent growth is decelerating roughly 40 basis points per week, and nationwide NER is up 7.2% compared to last year. This marks a serious deceleration from the 21.4% annual rent growth we recorded at the beginning of this year. Traffic, leasing, occupancy and leased rates were all negative or flat last week.
Key Takeaways – Data as of 07/31/2022
Traffic and Leases:
Occupancy and Leased:
Net Effective Rent:
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