Multifamily rents slipped in September amid cooling demand and economic growth. The average advertised rent decreased $6 to $1,750, according to Yardi Matrix’s National Multifamily Report. Year-over-year growth dropped 30 basis points to 0.6%.
“U.S. multifamily advertised rents fell $6 in September, the worst one-month drop since November 2022 and the worst September decline since 2009,” noted the report. “The poor performance comes as demand shows signs of weakening while high-supply markets have a glut of properties in the lease-up phase. Rents remain close to all-time highs, so while it is too soon to say September is the start of a trend, the drop could signal emerging market softness.”
Yardi Matrix noted a key factor is that over 525,000 units nationally are in the lease-up phase, which intensifies competition. Markets with the weakest rent growth often overlap those with the highest pipelines. Until the new supply is absorbed, rents will remain under pressure. Markets that posted negative rent growth last month include Dallas, which has 35,000 units in lease-up, or 3.8% of its stock; Phoenix, with 22,000 units in lease-up, or 5.9% of its stock; Austin, Texas, with 18,000 units in lease-up, or 5.5% of its stock; and Charlotte, North Carolina, with 18,000 units in lease-up, or 7.6% of its stock.
According to Yardi Matrix, concerns are growing about a slowing economy. Job growth was well below expectations in August, and more households anticipate declining incomes. While near-term demand faces pressure from supply and labor headwinds, one positive might be the Federal Reserve cutting short-term interest rates by 25 basis points in September, with more reductions possibly coming. This pivot could help stabilize conditions, noted the report.
Coastal and Midwest markets saw the highest year-over-year rent growth in September. New York led the way with 4.8% annual growth, followed by Chicago, 3.9%; the Twin Cities, 3.4%; San Francisco, 3.3%; and Philadelphia, 2.9%. Negative rent growth continued to be seen in many Sun Belt and Mountain West metros, with Denver at -4.3%; Austin at -4%; Phoenix at -3.3%; Las Vegas at -2%; and Dallas at -1.9%.
Rents at both lifestyle and renter-by-necessity assets were down month over month in September. Similar to year over year, coastal markets were at the top for rent gains. New York and San Francisco led the way among Yardi Matrix’s top 30 markets, both up 0.5%. The report noted that San Francisco continues to rebound, fueled by low supply and the artificial intelligence boom drawing high-paid tech employees back to the office.
Sixteen metros saw sharp month-over-month declines of 0.5% or more in September. These were primarily seen in Sun Belt markets; however, several non-typical markets emerged. Boston fell 1% despite low supply, while several recent Midwest rent growth leaders—Detroit; Chicago; and Columbus, Ohio—posted declines.
On the single-family rental (SFR) side, advertised rents dropped $15 in September to $2,194, with unchanged year-over-year growth.
“SFR rents hit a rough patch in September, as the $15 decline marked the worst month since February 2015,” noted the report. “Annual rent growth has not exceeded 1% since last year—making it one of the weakest stretches in a decade as the sector cools from pandemic-driven increases.”