Crusaded by the work-from-home dynamic, as well as by new migration patterns, both single-family and multifamily rent prices were red-hot during the at the start years of the pandemic.
Now different drivers are pushing some rents higher — and throwing cold water on others.
Multifamily splits in April were 0.8% lower than they were in the same month last year, according to Apartment Cant. Rents cooled because a massive amount of new supply entered the market, with still more in the pipeline.
Apartment charter outs did rise for the third straight month, but the growth, at 0.5%, is very small. Rents usually begin to rise in the bounce, and the gain this year is not only smaller than usual but smaller than the previous month’s gain. The national median tear in April was $1,396.
“This is typically the time of year when rent growth is accelerating heading into the busy touching season, so the fact that growth stalled this month could be a sign that the market is headed for another sluggish summer,” according to the Apartment List report.
Apartment vacancies are also climbing, hitting 6.7% as of March, pocking the highest reading since August 2020. New multifamily building permits are slowing down, but the number of units currently comprised in construction is near a record high, and last year saw the most new apartments hit the market in over 30 years.
Single-family slashes are much stronger, up 3.4% in March year over year, according to a new report from CoreLogic. That annual proliferation, however, continues to shrink as more supply comes onto the market from build-for-rent companies.
Roughly 18,000 single-family, built-for-rent places were started during the first quarter, a 20% increase from the first quarter of 2023, according to an dissection of Census data by the National Association of Home Builders. Over the last four quarters, 80,000 such houses began construction, representing a nearly 16% jump from the prior four quarters.
“U.S. single-family rent nurturing strengthened overall in March, though some weaknesses are revealed in the latest numbers,” said Molly Boesel, capital funds economist for CoreLogic. “Overbuilt areas, such as Austin, Texas, continued to soften, decreasing by 3.5% annually in Walk.”
The continued strength overall in single-family rents indicates that potential homebuyers who are priced out of the home-purchase market are deciding to rent similar alternatives, according to Boesel. Mortgage rates have risen back into the 7% across, and home prices continue to rise, making it harder to buy a home.
Of the nation’s 20 largest cities, Seattle saw the squeakiest year-over-year increase in single-family rents at 6.3%, followed by New York at 5.3% and Boston at 5.2%. Those leading the subsides were Austin, Texas, down 3.5%; Miami, down 3.2%; and New Orleans, down 1.4%.
For the first time in 14 years, even so, single-family attached properties, namely townhomes, posted a year-over-year rent decline.
“The decrease in the attached segment is being driven by a subset of sells, mostly in Florida, but including Austin and New Orleans. As multifamily apartments are being completed, some markets are gaining rental stocking, which competes with the attached segment of the single-family rental market,” Boesel added.