US Apartment Market Shows Signs of Stabilization

The U.S. apartment market is showing promising signs of stability this summer, with steady occupancy rates and modest rent growth trends. Let’s dive into the details:

Stable Occupancy Rates:

In July, the U.S. apartment market maintained its stabilization trend, with occupancy rates holding firm at 94.2% for the third consecutive month. This aligns with historical patterns for this time of year¹.

Notably, this stability comes despite the challenges posed by the pandemic and other economic factors.

Modest Rent Growth:

Effective asking rents saw a modest 0.3% increase in July. While this falls slightly below pre-2020 levels, it surpasses last year’s pace.

Year-to-date rent growth for 2024 mirrors that of 2023, with a 2.2% rise.

Concession usage also stabilized, with approximately 14% of units offering discounts. However, the average concession period ticked up to 28 days.

Regional Insights:

West Coast: Apartment occupancy in the West is nearing a plateau, declining only 10 basis points year-over-year to 94.6%. Coastal markets like Orange County, the Bay Area, and San Diego maintain stronger occupancy rates above 95%, while non-coastal markets (such as Phoenix, Salt Lake City, Las Vegas, and Denver) remain below 94%.

Southern Markets: Apartments in the South are feeling the effects of high supply. 18 of its 65 key markets, including 10 in Florida, experienced both monthly and annual rent declines in July. Texas markets like Austin and San Antonio continue to see rents drop sharply, while Charlotte and Raleigh/Durham bucked the trend with consecutive months of rent increases. Atlanta, however, saw rents fall by 0.5% in July, marking a nearly 5% year-over-year decline.

The Takeaway:

As we move into Q4, apartment owners and operators can expect occupancy rates to remain stable.

Coastal markets in the West are likely to outperform their non-coastal counterparts.

The South will continue facing challenges from high supply levels, although the surge in new construction that peaked at a 40-year high last year will begin to taper off¹.

In summary, the U.S. apartment market is navigating a delicate balance, and informed stakeholders should keep a close eye on these trends as we approach the end of the year. Stay tuned for further updates! 🏢📈³⁴.

Sources:

(1) RealPage: US Apartment Market Shows Signs of Stabilization in July. https://www.credaily.com/newsletters/realpage-us-apartment-market-shows-signs-stabilization-july/.

(2) State of the U.S. Multifamily Market: Mid-Year 2024 — Apartments.com. https://www.apartments.com/grow/learning-center/state-of-the-market-mid-year-2024-webinar.

(3) July Sees More Stability in Apartment Occupancy, Rent Growth. https://www.credaily.com/briefs/july-sees-more-stability-in-apartment-occupancy-rent-growth/.

(4) Housing market shows signs of stabilizing — BuildFax. https://www.buildfax.com/blog/housing-market-shows-signs-of-stabilization/.