U.S. apartment rent growth continued to slow in July, with more than half the nation’s 50 biggest multifamily markets seeing month-over-month declines.
The national average monthly rent, at $1,717, was virtually flat and unchanged from June, according to a report from Apartments.com, the listings website owned by CoStar Group. The month-over-month change was a negligible 0.03% decrease, marking the sixth straight month of flat or negative growth. U.S. annual rent growth has also dipped, from 1.5% in January to 1.1% in July.
While the market isn't experiencing a broad slowdown, its performance since the start of the year is on a downward trend, the report said. That trajectory reflects pressure from increased supply and cooling demand, as evidenced by the July data.
“That’s a signal that seasonal demand may be fading faster than usual, because we are in the spring-summer leasing season, which is typically the strongest period of demand in apartment markets,” Grant Montgomery, CoStar’s national director of multifamily analytics, said. “And the fact that we are seeing declines at this time may portend a broader trend that we need to keep our eyes on.”
However, the rent changes so far are moderate, and the national average is still above year-ago levels, according to the report.
Regional apartment rent performance continues to be uneven, with the Midwest and Northeast spearheading growth while the South and West fall behind. The Midwest led all regions with a 0.06% month-over-month increase and 2.6% annual growth. The Northeast also posted gains, up 0.03% from the prior month and 2.2% annually.
By contrast, the South slipped down 0.08% on a monthly basis but is still up 0.3% annually. The West slid 0.22% month over month and is now down 1.1% from a year ago.
“Elevated construction is still weighing on the rents out there, where new deliveries continue to outpace demand,” Montgomery said.
More than 50% of the biggest U.S. apartment markets by inventory posted monthly rent declines in July, a shift that could affect annual growth figures as seasonal demand fades and supply pressures remain, according to the report.
San Francisco ended the month with the largest monthly rent growth, at 0.43%. Orange County, California, followed at 0.4%, with Oklahoma City at 0.37%; Norfolk, Virginia, at 0.30%; and St. Louis not far behind at 0.29%. San Francisco also saw the largest rent growth year over year nationally at 5.3%, followed by Chicago at 3.8%; San Jose, California, at 3.2%; and Norfolk, Virginia, and Pittsburgh both at 2.7%.
On the flip side, Las Vegas had the biggest monthly rent decline at 0.6%. It was followed by Tucson, Arizona, with a 0.51% decline; San Antonio at 0.46%; and Tampa, Florida, and Phoenix both at 0.44%. Austin, Texas, led the country with the largest annual rent decline at 4.3%, followed by Denver at 3.5%, Phoenix at 2.9%, San Antonio at 2.3% and Tucson at 1.8%.
The numbers reflect a regional divide, with the Midwest and select coastal rental markets outperforming Sun Belt areas that have a fresh supply of multifamily properties, according to the report.