March reports record gains in multifamily rent growth in 20 months

Multifamily rent growth reached a new record in March 2024, recording the largest gain in 20 months. Asking rents for multifamily units increased $8 during the month to $1,721; year-over-year growth grew 30 basis points to 0.9 percent—a normal seasonal growth pattern according to Yardi Matrix.

In the March 2024 National Multifamily Report, Matrix’s data provides “some level of comfort” for worried market observers. While 13 of the top metros had negative rent growth over the past year, only two metros reported negative growth in March.

Graph of National Average Rents for multifamily housing since March 2022. — National Average Rents. Courtesy Yardi Matrix

Where is multifamily rent growth the highest?

As the economy continues to create jobs, with household growth boosted by immigration and wage growth, demand for multifamily units continues to rise. Markets in the midwest, such as Columbus, Ohio, Kansas City, Mo., and Indianapolis, Ind., have the highest multifamily rent growth. These metros trailed only New York City, N.Y., which topped the list with 5% year-over-year rent growth.

In March, San Francisco, Calif., was the only metropolitan city to report a growth in occupancy rate (0.1%) year-over-year. On the other hand, 21 metros have occupancy rates down by 0.5% or more, including Atlanta, Ga., and Indianapolis (both down 1.2%).

National Lease Renewals

The national lease renewal rate averaged 64.8% at the beginning of 2024—the first time it’s dropped below 65% in more than two years.

Lease renewals were highest in metros like New Jersey (82.6%), Philadelphia, Pa. (77.4%), and Miami, Fla. (70.4%); renewals were lowest in San Francisco (53.5%), Los Angeles (57.6%), and Austin, Texas (58.2%).

Renewal Rent Growth

Year-over-year renewal rent growth—the change for residents that are rolling over existing leases—declined in January 2024 as well, to 4.6 percent.

According to the report, renewal rents have been down every month since May 2023. The metros with the highest year-over-year renewal rent growth include Indianapolis (8%), San Diego (7.8%), and Orlando (7.7%). Just two metros reported negative growth, with Las Vegas, Nev. (–2%) and Austin (–1.5%) at the end of the list.

Overall outlook for multifamily housing in 2024

From the December 2023 National Multifamily Report by Yardi Matrix:

Expenses, income, deliveries, and interest rates pose key challenges for the multifamily industry this year
Though the market is expected to deliver over 500,000 units this year, there is a dramatic decrease in starts
Recent interest rate declines alleviate potential distress for multifamily owners, but long-term stability remains uncertain

Click here to read the full Yardi Matrix report.