Yardi: Asking Rents Rise 11.4% YOY, Monthly Growth Moderates Slightly at $16

Article originally posted on Multifamily Executive on October 14, 2021

While YOY rent growth is still setting records, month-to-month growth has slowed for the first time in six months.

Asking rents rose by 11.4% year over year at the national level in September, while the national average rent rose to an all-time high of $1,558, up $16 from August and 11.1% this year to date through three quarters. While this growth is strong by historical standards, September marks the lowest rate of increase for the national average rent in six months, according to Yardi Matrix’s Multifamily National Report.

The top 15 markets for YOY rent growth this month are all located in the Sun Belt, with coastal and Midwestern markets dominating the lower half of the top 30. Rent growth is healthy in all 30 markets, according to Yardi, and markets with record increases include Baltimore at 11.4% and Philadelphia at 9.7%. Phoenix leads the way at well over 20% rent growth, followed by Tampa, Florida; Las Vegas; and Miami—all registering over 20%.

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A number of primary markets rank near the bottom of the top 30 but still maintained between 4% and 8% rent growth YOY, including New York, Los Angeles, Chicago, Boston, and Washington, D.C.

Rents rose by 1% on a month-to-month basis in September, marking an 80 basis point deceleration from August. This marks the first month with less than 1.2% month-to-month rent growth at the national since February. Tampa, Miami, and Dallas lead with well over 2% rent growth, while Seattle, Boston, Chicago, and the Twin Cities have posted negative rent growth, showing signs of potential seasonality.

 

Rents in the single-family build-to-rent (BTR) sector have risen 14.3% YOY from last September. Tampa leads the nation in BTR rent growth, with rents up 38.8% YOY, followed by Miami with 32.7% rent growth. Other leading markets include Phoenix, Atlanta, Austin, and Denver. Occupancy has risen 1.2% over the same period, with Houston leading the occupancy gains at over 8%.

While rents have risen at historic rates over the last year, Yardi cautions that this tailwind has been met with rising material costs, backlogs in supply chains, and labor shortages that impact construction and operations alike. It remains to be seen whether growth will slow as normal seasonal trends bear out and new apartment supply issues continue. Yardi anticipates slowing growth into 2022, but acknowledges that rent gains will remain strong compared with historical levels.

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