New data reveals positive monthly rent growth for second month in a row
Today, Apartments.com – a CoStar Group company – released an in-depth report of multifamily rent growth trends for February 2023 backed by analyst observations. February marks the second month in a row of positive month over month rent growth, signaling a surprisingly strong start to the year but still not enough to reverse the downward movement of annual rents.
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Year Over Year Rent Growth, by Market (Graphic: Business Wire)
“Nationally, sequential monthly rents rose $2.50 or 0.15% in February, marking the second month of positive rent growth after a negative streak from August to December of 2022,” said Jay Lybik, National Director of Multifamily Analytics at CoStar Group. “However, national year over year rent growth continues to decline with supply additions outstripping mediocre demand, causing instability across the rental market. If we’re able to record a few more months of positive monthly rent growth, year over year rent growth could reverse course, bringing supply and demand closer to equilibrium.”
YEAR OVER YEAR RENT GROWTH OUTLOOK
National year over year rent growth continues to remain positive, but fell to 2.9% at the end of February compared to 3.2% in January. Only two of the largest 40 markets saw their year over year asking rent expand in February – Baltimore and Philadelphia. However, the positive upward movement was in the 10 and 20 basis points range, representing a small reversal in the overall weakening rent growth picture.
INDIANAPOLIS HOLDS TOP RENT GROWTH SPOT, ATLANTA AND AUSTIN DECELERATE RAPIDLY
For the third month in a row, Indianapolis came out on top with the largest market rent growth. Several other Midwest markets are also among the top 10 rent growth leaders as new supply additions pose less of an issue in these areas. The majority of Sunbelt markets have witnessed significant pullback in rents over the past year, except for Miami and Orlando which have defied the odds and remain amongst the top rent growth leaders.
Las Vegas and Phoenix have seen a dramatic slowing of growth, rounding out the bottom of the annual rent growth ranking in February. Both markets watched year over year asking rents go from the low 20% range in Q4 2021 to negative. Additionally, Atlanta and Austin have experienced significant deceleration over the past 12 months, going from 18% year over year to barely positive in February.
SUNBELT HIGHLIGHTS WEAK RENTAL MARKET
Overall rental market weakness across the Sunbelt remains on full display in February’s month over month shift. Phoenix, Austin, Nashville, Orlando, Las Vegas and Dallas-Fort Worth witnessed either negative or barely positive movement in their rent growth, when, compared to a year ago, these markets were leading the nation in rent growth.
February’s small positive rent growth offers the possibility that demand could be slowly gaining momentum in time for the upcoming spring leasing season. However, with a record number of units projected to deliver this year and 13 markets poised for new supply records, that demand will have to be substantial to halt the year over year rent declines and stabilize rents in 2023.
About CoStar Group
CoStar Group, Inc. (NASDAQ: CSGP), a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Homes.com offers real estate professionals advertising and marketing services for residential properties. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France’s leading commercial real estate news service. CoStar Group’s websites attract tens of millions of unique monthly visitors. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information.
Apartments.com is the leading online apartment listing website, offering renters access to information on more than 1,000,000 available units for rent. Powered by CoStar, the Apartments.com network of sites includes Apartments.com, ApartmentFinder.com, ApartmentHomeLiving.com, Apartamentos.com, WestsideRentals.com, ForRent.com, ForRentUniversity.com, After55.com and CorporateHousing.com.
Apartments.com is supported by the industry's largest professional research team, which has visited and photographed over 500,000 properties nationwide. The team makes over one million calls each month to apartment owners and property managers, collecting and verifying current availabilities, rental rates, pet policies, fees, leasing incentives, concessions, and more. Apartments.com offers more rental listings than any other apartments website, and innovative features including a drawing tool that allows users to define their own search areas on a map, and a "Travel Time" feature that lets users search for rentals in proximity to a specific address. Apartments.com creates easy access to its listings through a responsive website and iOS and Android apps, and provides unmatched exposure for its advertisers through an intuitive name, strategic search engine placements and innovative emerging media.
The Apartments.com network reaches millions of renters nationwide, driving both qualified traffic and highly engaged renters to leasing offices.