Multifamily rent growth in the United States declined in August, marking the biggest drop since January amid an elevated supply of apartments.
The national average monthly rent was $1,713 last month, down 0.23% from July's revised rent of $1,719, according to a report by CoStar's Apartments.com listings website. This marks the second straight flat or negative national monthly rent change.
However, the most recent results also show that all regions posted a decline. That's a shift from July, when the Midwest and Northeast still recorded modest gains.
The West had the largest pullback, with a 0.5% month-over-month decline, followed by the South at a 0.4% drop. In the Midwest, the average rent dipped 0.2%, while Northeast rents fell 0.1%.
Moreover, annual rent growth decelerated further, to 1% in August. That's down from 1.1% annual rent growth in July and 1.5% at the start of the year.
On an annual basis, the Midwest, at 2.5%, and Northeast, at 2.2%, remained the strongest-performing regions for rent growth, the report found. The average annual apartment growth in the West was down 1.3% year over year.
"While month-over-month declines are expected during this period, the recent year-over-year slowdown — which adjusts for seasonality — signals a more pronounced softening in the market," according to the report. "This year's pullback exceeds typical seasonal patterns and reinforces the broader trend of moderation in rent growth."
The patterns reinforce a broader trend that markets with the highest levels of new construction are seeing the weakest rent performance. At the same time, the more supply-constrained metropolitan areas, particularly those in the Midwest and certain coastal regions, continue to outperform.
Richmond, Virginia, posted the steepest monthly decline in rent growth in August at a drop of 1.1%.
Some Sun Belt markets continue to grapple with elevated vacancies and aggressive new supply that are putting downward pressure on rents. With a decline of 4.7%, Austin, Texas, recorded the weakest year-over-year annual rent growth among markets tracked by Apartments.com. Denver had a drop of 3.5% year-over-year rent growth, and Phoenix posted a decline of 3.1%, "with continued declines driven by oversupply outstripping very strong demand," the report said.
San Francisco led all markets with a 0.6% month-over-month increase in rent, followed by Orange County, California, with a gain of 0.3%, and Northern New Jersey rising 0.1%. Those gains were largely concentrated in coastal and gateway markets, many of which have seen limited new supply.
Some markets, however, saw stronger year-over-year rent growth in August.
In terms of annual rent growth, San Francisco led the nation with a gain of 6.2%, followed by Chicago, at 3.9%; San Jose, California, at 3.5%; and New York, at 2.8%.