National year-over-year rent growth continues to remain positive, but fell from 3.2% in January to 2.9% in February, according to a new report from Apartments.com.
Apartments.com’s February 2023 Rent Growth Report found that February marks the second month in a row of positive month-over-month rent growth, signaling a surprisingly strong start to the year but still not enough to reverse the downward movement of annual rents.
- Only two of the largest 40 markets saw their year-over-year asking rent expand in February—Baltimore and Philadelphia. However, the positive upward movement was in the 10 and 20 basis points range, representing a small reversal in the overall weakening rent growth picture.
- For the third month in a row, Indianapolis came out on top with the largest market rent growth. Several other Midwest markets are also among the top 10 rent growth leaders as new supply additions pose less of an issue in these areas.
- The majority of Sunbelt markets have witnessed significant pullback in rents over the past year, except for Miami and Orlando which have defied the odds and remain amongst the top rent growth leaders.
- Las Vegas and Phoenix have seen a dramatic slowing of growth, rounding out the bottom of the annual rent growth ranking. Both markets watched year-over-year asking rents go from the low 20% range in Q4 2021 to negative.
- Additionally, Atlanta and Austin have experienced significant deceleration over the past 12 months, going from 18% year over year to barely positive in February.
- Overall rental market weakness across the Sunbelt remains on full display in February’s month-over-month shift. Phoenix, Austin, Nashville, Orlando, Las Vegas and Dallas-Fort Worth witnessed either negative or barely positive movement in their rent growth, when, compared to a year ago, these markets were leading the nation in rent growth.
- February’s small positive rent growth offers the possibility that demand could be slowly gaining momentum in time for the upcoming spring leasing season. However, with a record number of units projected to deliver this year and 13 markets poised for new supply records, that demand will have to be substantial to halt the year over year rent declines and stabilize rents in 2023.
“Nationally, sequential monthly rents rose $2.50 or 0.15% in February, marking the second month of positive rent growth after a negative streak from August to December of 2022,” said Jay Lybik, National Director of Multifamily Analytics at CoStar Group. “However, national year-over-year rent growth continues to decline with supply additions outstripping mediocre demand, causing instability across the rental market. If we’re able to record a few more months of positive monthly rent growth, year-over-year rent growth could reverse course, bringing supply and demand closer to equilibrium.”
For the full report, click here.