After months of slowing gains, apartment rents backtrack in November

After weathering the turbulent and weakening economy U.S. during most of this year, apartment rents finally took a downward turn in November, with rents falling by $9 last month — the largest monthly rent decline in more than a decade, according to Yardi Matrix.

Monthly rent growth had been flat or slowing for months, so combined with seasonality, the slide wasn’t unexpected. Rent increases hovered at unsustainable levels and far exceeded historical growth patterns for nearly two years. Consider, for example, that nationwide average asking rents increased by 22% between January 2021 and October 2022. In November, however, year-over-year growth fell to 7%, its lowest point in 17 months, per Yardi data.

It’s worth noting that at $1,719 in November, the average asking rent remains at a healthy figure despite the decline. And each of the top 30 apartments markets in the U.S. tracked by Yardi still logged positive annual rent growth in November, although nearly two-thirds of them showed negative rent growth over the past three months.

Among the top 30, Indianapolis had the strongest year-over-year rent gain at 11.4%, an increase that would have barely cracked the top 20 just a few months ago. Indianapolis was one of only two cities (joining New York City) that posted a monthly gain in asking rents in November.

Apartment demand is clearly softening, so it remains to be seen how far the slide in rents will go. The recent lag in renter demand also is being mirrored in multifamily transaction activity, with higher capital costs denting deal movement.

Fannie Mae and Freddie Mac were allocated $78 million each in loan purchase caps to support the multifamily market in 2022, and Yardi noted that it’s doubtful that either government-sponsored enterprise will use their full allocation. Per public filings, Fannie originated $54.7 billion through the first 10 months of the year while Freddie originated another $51.2 billion. Both agencies appear to be on track to finish with about $70 billion in multifamily originations by the end of this year.


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