Renters nationwide can rejoice as the increase in apartment supply is putting pressure on rent growth, with asking rents for professionally managed apartments only rising by 0.2% in February compared to the previous year. This rate is significantly lower than the historical average of 0.6% dating back to 2010. RealPage predicts that this trend of muted rent growth will persist throughout 2024 due to the continued impact of supply on rental prices.
Cities like Austin experienced a significant decline of 6.7% in rent growth, while Virginia Beach saw a notable increase of 3.3%. Despite expectations of a slowdown in rents, inflation indicators like the Consumer Price Index are still showing signs of stickiness in rental costs. Analysts attribute this to a lag in the data, with February CPI data set to be released soon. Despite these factors, apartment occupancy remained steady at 94.1% in February, according to RealPage, suggesting a stable market even with record-high construction activity in the sector.
RealPage highlighted the challenge posed by the massive construction activity in the apartment sector, with close to a million units under construction nationwide at the end of 2023 and 672,000 units expected to be completed in 2024. This surge in supply could continue to impact rent growth and occupancy levels moving forward, creating a dynamic rental landscape for both landlords and tenants to navigate.
