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Demand for multifamily homes began to deteriorate in November as national rent growth plunged from its 2021 record highs, according to data from the Yardi Matrix National Multifamily Report.
The US asking rents fell to $1,719 last month, down $9 from a year earlier and the biggest one-month drop since the global financial crisis.
The report attributed the decline to economic headwinds and lower consumer sentiment, which led to weaker demand.
Yardi Matrix noted in the report that the drop in rents was not unexpected and not necessarily a sign of a deep recession. Rent increases have been well above normal growth patterns for nearly two years.
Average requested rents increased 22% nationwide between January 2021 and October 2022, a rate that would be unsustainable under optimal conditions.
However, decades of high inflation mean household balance sheets are weaker than they were a year ago, while economic growth is slowing as the Federal Reserve raises interest rates.
While the average asking rent rose 6.4% to $1,224 in November, it was nearly 30% lower than the national average of $1,719. The employment rate also fell, falling 60 basis points year-on-year to 95.6%.
The slowdown in the single-family rental market has also begun, with the average asking rent falling from $5 to $2,091 in November. Year-over-year, single-family home rental growth declined 80 basis points to 5.9%.
Yardi Matrix wrote that rising interest rates remain a big story in the SFR segment as declining home sales affect when and where people move.
Reference Source: MPA
