07 Oct National rent and occupancy rates flatten in September
For September of this year the average asking national asking rent was $1,718, the same rate as it was in August (as seen in the graph below). With this, rents are still up 6.6% from the start of the year. Typical rents are usually up by an average of 2.9% when it gets to September, so 6.6% is still a very high growth for this year.
Overall rental growth has decelerated by 150 basis points to 9.4% year-over-year. Lease renewals (which earlier were not hot due to being able to charge more to new tenants) are now increasing as the market becomes stagnant (as depicted in the graph below). The lease renewal market has increased by 60 basis points in August to a rate of 59.1%. With this, the overall year-over-year renewal rental growth has been up 50 basis points, making it to 10.8%.
In the single-family market year-over-year average rents have decreased by $7 to $2,081. This comes with a decrease in yearly growth by 170 basis points to 7.8% and overall occupancy decreasing by 10 basis points to bring it to 1.1% for this market. Meanwhile, U.S. multifamily growth is down by more than a full percentage point for the third straight month. This makes the average multifamily year-over-year rental growth go below 10% for the first time since July 2021.
With the Feds increasing rates, this is decreasing the demand for housing. These increases are intended to reduce wage growth and will put some people out of work but will eventually decrease the cost of housing. This is leading more families to look for less expensive housing, which is difficult to come by with these current trends but is starting to drive the market to turn that way.
Lee & Associates | North San Diego County