Radix Multifamily Podcast: Recent Episodes
Chris Nebenzahl
Covering the latest trends in multifamily housing data, built off real time analytics at the property, submarket and market level.
The national multifamily picture strengthened broadly in the week of August 2, with rents and leasing both picking up as occupancy held above last year. As of August 2, the average U.S. occupancy rate was 94.86%, up 4 basis points on the week and up 16 basis points from a year ago. That's a third straight week above last year. Leased percentage was 96.89%, up 11 basis points on the week and down 70 basis points from a year ago. The leased percentage is holding its weekly gain, even as the year-over-year gap remains.
Leasing activity gained momentum, with an average of 2.3 leases signed per property this week, up 0.2 from the prior week and the strongest pace we've seen in this stretch. That said, it's still 0.7 leases per week below where things stood a year ago. The recent uptick in new leasing, following weeks of flat volume, is an encouraging signal, it suggests demand is contributing to the recent firming, rather than the improvement being driven by retention alone.
Net effective rent picked back up. NER rose 0.4% on the week to $1,766, and annual NER growth for new leases improved to negative 1.4%, up from negative 1.9% the prior week. After a flat stretch, rents are once again narrowing the annual gap, that's the piece that had been lagging. The national picture remains uneven, with several coastal markets posting solid positive annual growth while much of the Sun Belt is still working through negative territory.
RevPAU came in at $1,675, up 0.5% on the week, with the annual comparison improving to negative 1.3% from negative 1.6% the prior week. Revenue is advancing this week, with occupancy, rents, and leasing volume all pointing the same direction. For operators, this was a broadly positive week-over-week read, with all five metrics moving the right way as we open August, even as a couple of them still work through year-over-year gaps.
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The national multifamily picture held its ground in the week of July 26, with occupancy staying above last year for a second straight week. As of July 26, the average U.S. occupancy rate was 94.82 percent, essentially flat on the week and up 29 basis points from a year ago. The leased percentage was 96.77 percent, up 3 basis points on the week and down 62 basis points from last year. Last week's step up in occupancy held, an encouraging sign that the gain was more than a temporary blip.
Leasing velocity firmed a bit. The average number of leases signed was 2.1 per property, up 0.1 from the prior week and down 0.7 per week compared to a year ago. That annual gap narrowed from 0.9 the prior week, so demand picked up modestly even as occupancy stayed firm, a healthier mix than the week before, when occupancy climbed on retention alone.
Net effective rent firmed slightly. NER rose 0.2 percent on the week to $1,762, though annual NER growth for new leases held at negative 1.9 percent. Rents are stable week to week but have not yet resumed narrowing the annual gap, which leaves pricing as the soft spot. The range across the country stayed wide, with several coastal markets posting solid positive annual growth while much of the Sun Belt is still working through negative territory.
RevPAU, which combines the change in rents and occupancy, was $1,671, up 0.2 percent on the week, with the annual comparison at negative 1.6 percent, roughly steady with the prior week. Revenue per available unit is holding up on the strength of occupancy and firmer rents together. For operators, the read this week is steady: the occupancy step up held, leasing improved, and pricing remains the one area still waiting to turn.
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The national multifamily picture took a clear step up in the week of July 19, led by a notable jump in occupancy. As of July 19, the average U.S. occupancy rate was 94.85 percent, up 49 basis points from the prior week and now 39 basis points above a year ago. That is the first time occupancy has run ahead of last year in months. The leased percentage was 96.74 percent, up 29 basis points on the week and 61 basis points below last year. The improvement was across the board, with gains in essentially every tracked market in the week.
For leasing velocity, results were soft this week. The average number of leases signed was 2.0 per property, flat from the prior week and 0.9 below a year ago, a gap that widened from 0.6 the prior week. With occupancy climbing even as new lease volume held flat and trailed last year, the gain looks more like stronger retention than a wave of new leasing.
Net effective rent gave back a little. NER eased 0.1 percent on the week to $1,758, and annual NER growth for new leases slipped to negative 1.9 percent, after narrowing to negative 1.5 percent the prior week. Pricing softened even as occupancy firmed, a reminder that the two do not always move together. The range across the country stayed wide, with several coastal markets posting positive annual growth while much of the Sun Belt continues to work through negative territory.
RevPAU was $1,667, up 0.4 percent on the week, with the annual comparison improving to negative 1.5 percent from negative 1.7 percent the prior week. The occupancy gain offset softer rents, and revenue per available unit came out ahead. For operators, the read this week is that occupancy strength is doing the heavy lifting on revenue right now, while pricing power stays limited.
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The national multifamily picture kept improving in the week of July 12, with occupancy firming to its best annual comparison in recent weeks. As of July 12, the average U.S. occupancy rate was 94.37%, up 9 basis points from the prior week and down just 17 basis points from a year ago, the narrowest annual occupancy gap in the recent stretch. The leased percentage was 96.45%, up 8 basis points on the week and down 78 basis points from last year.
Leasing velocity held steady. The average number of leases signed was 2.1 per property last week, flat from the prior week, and down 0.6 per week compared to a year ago. The annual gap was essentially unchanged from the prior week, so demand is holding its ground against last year rather than gaining, even as occupancy continues to firm.
Net effective rent edged higher. NER rose 0.1% on the week to $1,760, and annual NER growth for new leases improved to negative 1.5%, up from negative 1.6% the prior week. Rents are grinding back toward last year's level, with the annual gap narrowing for a second straight week. The range across the country remains wide, with several coastal markets posting solid positive annual growth while much of the Sun Belt is still working through negative territory.
RevPAU was $1,661, up 0.2% on the week, with the annual comparison improving to negative 1.7% from negative 1.9% the prior week. With occupancy firming and rents edging up together, revenue per available unit is making steady progress against last year. For operators, the read this week is constructive: the improvement that resumed after the July 4 holiday is holding, and the year over year comparisons keep tightening as we move through July.
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The national multifamily picture held steady in the week of July 5, with the gap to last year continuing to close on most metrics. For much of the spring, the annual comparisons had been improving week by week as this year's numbers caught up to last year's. That progress stalled briefly the week prior, then resumed this week. As of July 5, the average U.S. occupancy rate was 94.28 percent, up 5 basis points from the prior week and down 25 basis points from a year ago. The leased percentage was 96.36 percent, up 8 basis points on the week and down 81 basis points from last year. Occupancy is strengthening, and both annual gaps closed slightly versus the prior week.
Leasing velocity held its ground through the holiday week. The average number of leases signed was 2.1 per property, roughly steady on the week and 0.5 below a year ago. That annual gap narrowed from 0.7 the prior week, so demand kept closing the distance to last year even across the July 4 stretch, when activity typically softens.
Net effective rent was flat at the national level, holding at $1,756 on the week, while annual NER growth for new leases improved to negative 1.6%, up from negative 2.0% the prior week. Rents are steady, and the annual gap resumed narrowing after widening last week. The range across the country remains wide, with several coastal markets posting positive annual growth while much of the Sun Belt is still working through negative territory.
RevPAU, was $1,656, up 0.1% on the week, with the annual comparison improving to negative 1.9% from negative 2.3% the prior week. Revenue per available unit is closing its annual gap right alongside rents. For operators, the read this week is steady and constructive: occupancy is firming, leasing held through the holiday, and the year over year comparisons are tightening again as we head into July.
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The national multifamily picture settled back this week after last week's jump, with occupancy holding roughly steady. As of June 28, the average U.S. occupancy rate was 94.24%, essentially flat on the week and down 29 basis points from a year ago. The leased percentage was 96.28%, unchanged on the week and down 93 basis points from last year. Occupancy is holding the line, but the small improvement that had been building through mid-June paused this week.
Leasing velocity held its ground. The average number of leases signed was 2.2 per property last week, flat from the prior week, and down 0.7 per week compared to a year ago. The annual gap was steady with the prior week, so demand is neither gaining nor losing ground against last year's pace as we close out June.
Net effective rent gave back some of last week's improvement. NER stood at $1,756, and annual NER growth for new leases slipped back to negative 2.0%, after narrowing to negative 1.0% the prior week. Now, some of that swing reflects last year's stronger numbers, which set a higher bar, but the honest read is that the sharp rent step-up we flagged last week didn't carry through. The range across the country remains wide, with several coastal markets still posting positive annual growth while much of the Sun Belt sits in negative territory.
RevPAU was $1,655, with the annual comparison widening to negative 2.3% from negative 1.3% the prior week. With rents softening, revenue per available unit followed them lower year over year. For operators, the read this week is that June's late momentum cooled, though occupancy and leasing velocity both remain steady heading into July.
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The national multifamily picture strengthened in the week of June 21, with momentum building across nearly every metric. As of June 21, the average U.S. occupancy rate was 94.32%, up 6 basis points from the prior week and down just 25 basis points from a year ago, the narrowest annual gap we have seen in recent weeks. The leased percentage was 96.37%, up 6 basis points on the week and down 86 basis points from last year. Occupancy continues to firm, and the gap to last year keeps shrinking.
Leasing velocity held its ground and continued to close the distance to last year. The average number of leases signed was 2.2 per property last week, flat from the prior week, and down 0.6 per week compared to a year ago. That annual gap narrowed again from 0.7 the prior week, another small step in the right direction as we move deeper into the summer leasing season.
Net effective rent is where this week's story really lands. NER rose 0.8% on the week to $1,770, the strongest weekly gain we have seen in this stretch, and annual NER growth for new leases improved to negative 1.0%, up from negative 1.9% the prior week. Rents are now nearly back to where they were a year ago. The range across the country remains wide, with several coastal markets posting solid positive annual growth while much of the Sun Belt is still working through negative territory.
RevPAU, which combines the change in rents and occupancy, was $1,670, up 0.8% on the week and down 1.3% from a year ago, a clear improvement from negative 2.2% the prior week. Revenue per available unit is accelerating right alongside rents, and the annual drag has now been cut nearly in half over the past two weeks. For operators, the read this week is genuinely encouraging: occupancy is steady, rents are firming, and the annual comparisons are closing fast as spring leasing winds down.
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Multifamily Operational Results
The national multifamily picture stayed stable in the week of June 14, with a small encouraging shift underneath the surface. As of June 14, the average U.S. occupancy rate was 94.26%, up 3 basis points from the prior week but still down 33 basis points from a year ago. The leased percentage was 96.31%, up 5 basis points on the week and down 101 basis points from last year. Occupancy continues to hold the line week to week, even if it is running modestly behind where we were a year ago.
Leasing velocity told a slightly better story this week. The average number of leases signed was 2.2 per property last week, flat from the prior week, and down 0.7 per week compared to a year ago. That annual gap narrowed from a full lease per week the prior week, which is a small but welcome sign that demand is inching closer to last year's pace as we move through June.
Net effective rent is where the trend is most visible. Annual NER growth for new leases improved to negative 1.9% nationally, up from negative 2.4% the prior week, and NER ticked up 0.1% on the week to $1,752. Rents are slowly closing the gap to last year. The range across the country remains wide, with several coastal markets posting positive annual growth while much of the Sun Belt is still in negative territory, some of it down in the high single digits.
RevPAU, which combines the change in rents and occupancy, was $1,652, up 0.1% on the week and down 2.2% from a year ago, an improvement from negative 2.6% the prior week. The annual drag on revenue per available unit is easing as rents firm, even with occupancy sitting slightly below last year. For operators, the read this week is constructive: occupancy is steady and the rent trend is finally moving in the right direction.
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Multifamily Operational Results
The national multifamily picture held steady to open June, with occupancy ticking up slightly on the week even as the annual comparison stayed soft. As of June 7, the average U.S. occupancy rate was 94.24%, up 2 basis points from the prior week but down 23 basis points from a year ago. The leased percentage was 96.27%, essentially flat week over week and down 104 basis points from last year. Holding the line this deep into leasing season is encouraging, but we are still running behind where we were at this point last year.
Leasing velocity remains the metric to watch. The average number of leases signed was 2.2 per property last week, down 0.1 from the prior week and down a full lease per week compared to a year ago. That year over year gap is the clearest signal that demand has not fully caught up with the supply working through the system, and it is the main reason occupancy is holding rather than climbing the way we would normally expect in early June.
Annual net effective rent growth for new leases was negative 2.4% nationally, and NER was flat week over week at $1,751. Rents have struggled to find momentum this spring, and the annual figure reflects the softer pricing environment operators have been navigating across much of the country. The range remains wide, with a handful of coastal markets still posting positive annual growth while several Sun Belt markets sit in negative territory, some of them down in the high single digits.
RevPAU, which combines the change in rents and occupancy, was $1,650, up 0.1% on the week but down 2.6% from a year ago. With both rents and occupancy running below last year's levels, revenue per available unit continues to feel pressure from both sides. For operators, the takeaway is consistent with recent weeks: protect occupancy where you can, because pricing power will stay limited until leasing velocity picks back up.
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The multifamily market closed out May on a note of quiet resilience. Occupancy nudged higher for the week, the year-over-year gap continued to narrow, and leasing activity held steady. The rent side remains the story that operators are watching most closely.
As of May 31, the average U.S. occupancy rate was 94.22%, up 4 basis points from the prior week and down 22 basis points from a year ago. The leased percentage was 96.26%, up 5 basis points week over week and down 1.00% from last year. Both metrics have been moving in the right direction on a weekly basis throughout May, and the annual gap, while still present, is smaller than it was at the start of the month.
The average number of leases signed was 2.3 per property last week, down 0.1 from the prior week and down 1.0 compared to this time last year. Leasing velocity has held in a narrow band all month. Markets on the higher end of the range are demonstrating that demand is there when supply and pricing are aligned.
Net effective rent for new leases was $1,751, up 0.1% from the prior week but down 2.4% from a year ago. RevPAU was $1,650, also up 0.1% week over week and down 2.6% annually. The weekly direction is encouraging, but the annual comparisons reflect the concession activity that pulled rents lower in the second half of May. Closing out the month with two consecutive weeks of flat to positive weekly NER movement is a modest stabilizing signal heading into June.
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The national occupancy rate held at 94.20% for the week of May 24, up one basis point from the prior week. The leased percentage came in at 96.22%, also edging up five basis points week over week. Both metrics remain below last year's pace, down 22 and 137 basis points respectively, but the week-over-week stability suggests seasonal demand is absorbing new availability without further deterioration.
Leasing velocity was flat at 2.4 leases per property for the week, unchanged from the prior period. The year-over-year gap remains meaningful at a full lease per week below last year's rate, a signal that the demand recovery operators were hoping for this spring has not yet materialized at the pace needed to close the YoY shortfall.
Net effective rent came in at $1,750 for the week, down 3.0% from the prior week and down 2.5% from a year ago. The week-over-week move reflects seasonal concession activity as operators compete for leases during a period of moderate demand. Markets vary considerably, with a handful of coastal and Midwest metros holding flat to slightly positive on an annual basis while Sun Belt markets face the steepest YoY pressure.
RevPAU, which captures the combined effect of rent and occupancy, came in at $1,648, down 3.0% week over week and 2.7% below last year. The revenue picture continues to reflect the same pattern visible across the spring: occupancy is largely stable, but concessions and softening effective rents are compressing the top line. For operators holding occupancy through pricing flexibility, the tradeoff is now showing up clearly in RevPAU.
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Markets strengthened this week following the U.S.-China trade truce, but rising fuel costs continue to pressure renter affordability, an important dynamic heading into the peak of leasing season.
- Energy and Inflation: AAA reports the national gas average at $4.56/gal as of May 21, up roughly 44% from a year ago. At those levels, fuel costs are becoming a meaningful pressure point for renter budgets during peak leasing season. The Fed has also signaled little urgency to cut rates given persistent inflation, keeping pressure on both consumers and operators with floating rate debt.
- Capital Markets: The S&P 500 closed at 7,433 on May 20, up sharply from the 6,944 level recorded in mid January. Investor sentiment has improved meaningfully since April as markets continue responding positively to easing trade tensions and broader economic stabilization.
- Mortgage Rates: The 30 year fixed mortgage rate sits near 6.58% according to Bankrate and the WSJ as of May 20. While below earlier 2026 highs, rates remain elevated relative to levels needed to meaningfully reopen the for sale housing market. Transaction activity remains subdued, continuing to support renter demand across many multifamily markets.
The broader macro environment remains mixed for multifamily operators. Improving market sentiment and stable renter demand are supportive, but elevated consumer costs continue limiting affordability flexibility in more price sensitive segments of the market.
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Economic Headlines
A temporary U.S.-China trade truce announced this week sent markets sharply higher, offering the first sustained relief investors have seen in months. The good news stopped there for most consumers, though, as the broader economic picture remains one of elevated costs and cautious hiring.
- Energy and Inflation: Brent crude has pulled back modestly from recent highs on ceasefire optimism, and the national gas average sits near $3.85/gal according to AAA, roughly flat from last week but still well above year-ago levels. The Fed's preferred inflation gauge remains above target, and while the trade pause reduces near-term tariff pressure, the pass-through of earlier cost increases into consumer goods is still working its way through household budgets.
- Capital Markets: The S&P 500 surged on trade deal news, recovering a meaningful portion of its year-to-date losses. The Dow followed suit. Whether the rally holds depends largely on whether the 90-day truce translates into a durable agreement, and most economists are not counting on it.
- Mortgage Rates: The 30-year fixed rate remains elevated near 6.8% according to Bankrate, keeping the for-sale market effectively frozen for millions of would-be buyers. That lock-in effect continues to support renter retention, though it does little to help operators push rents in markets where household income growth has stalled.
The market rally is welcome, but it does not immediately change the math for renters or operators. Tariff uncertainty, sticky inflation, and a job market that is adding positions unevenly mean demand-side pressure on multifamily remains measured heading into the peak leasing season.
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The ongoing conflict in the Middle East continues to drive the economic narrative, keeping energy costs painfully high for consumers and complicating the outlook for inflation and interest rates heading into peak leasing season.
For renters, the impact at the pump has been significant. The national gas average has surged past $4.50/gal according to AAA, up more than a dollar over the past two months, and that kind of sustained increase acts as a quiet drain on the discretionary budgets renters depend on to absorb higher monthly housing costs. Until energy prices meaningfully retreat, operators should expect that pressure to weigh on rent growth even as occupancy holds relatively steady. NBC News
- Energy: National gas average at $4.54/gal, up $1.00+ in roughly 60 days; oil prices remain volatile and elevated
- Capital Markets: The S&P 500 and Nasdaq closed at new record highs this week, with the Dow gaining over 600 points, though markets remain sensitive to any shifts in the geopolitical backdrop and could reverse quickly TRADING ECONOMICS
- Mortgage Rates: The 30-year fixed rate sits at 6.44% per Bankrate, high enough to keep would-be buyers renting longer, which supports occupancy but does not offset the broader affordability squeeze renters are feeling Bankrate
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The Conference Board’s April 28 release showed that adults under 35 are the only group with rising confidence. If you're looking for some optimism for multifamily, this provides a promising outlook for the sector’s vital demographic, even as they balance challenges in the labor market and an uptick in inflation.
However, this optimism faces a "white-collar cooling" in the job market driven by AI according to a recent article by The Wall Street Journal. While Q1 private-sector layoffs fell 1% overall, tech-specific cuts surged 40% in Q1 2026 as firms pivoted toward automation. The following details are for all role types, not just tech.
Layoffs by the Numbers:
- AI Restructuring: Meta (8,000 roles) and Snap (16% of staff) are cutting jobs specifically to fund AI infrastructure.
- High-Earner Impact: Significant April cuts at Nike, Morgan Stanley, and Disney (5,675 combined) target roles spanning technology, marketing, management, and operations.
- Largest Cuts: The sheer volume of cuts from giants like Oracle (projected 30,000) and UPS (30,000) signals a deep "right-sizing" of corporate operations nationwide.
While resilient sentiment among younger renters supports steady renewal rates, the concentration of massive AI-driven layoffs in tech and corporate sectors creates a significant headwind for new-lease absorption. It also casts doubt on a strong surge in the labor market in time to benefit this leasing season for multifamily.
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For years, 2026 was circled on the calendar as the year multifamily metrics would roar back. However, metro-level job data suggests the recovery is being stifled by the demand side of the equation. Despite supply becoming less of a challenge, job creation—the primary engine for household formation—has stalled across the U.S.
Here are comparisons of annual job gain for February 2026 relative to the three years before the pandemic according to the Bureau of Labor Statistics.
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The latest data is finally showing us the real-world impact of the "war shock," with skyrocketing oil prices officially putting an end to the recent cooling trend in inflation. Between those rising costs at the pump and a housing market that remains stubbornly stuck, renters are feeling the squeeze even as they find themselves staying in the rental pool longer.
Inflation Resurges on Energy Spikes: Headline inflation jumped to 3.3% on an annual basis in March, fueled by a massive 21.2% monthly surge in gasoline prices (seasonally adjusted). It was the highest monthly increase in gas prices since the series began in 1967.
While core inflation (excluding food and energy) cooled slightly to 2.6%, the increase in transportation and fuel costs is expected to trickle into consumer goods prices over the next 90 days. From a multifamily perspective, the higher costs are hitting at a time when many renters are deciding what budget they can afford for their next lease.
Housing Market Gridlock Deepens: Existing-home sales dropped 3.6% in March to 3.98 million units. It was the second lowest level in the last 18 months according to the National Association of Realtors.
Despite a brief dip in mortgage rates earlier this year, the impact of the conflict with Iran pushed 30-year fixed rates back toward 6.4%, effectively pricing out 1.4 million potential buyers based on estimates from the National Association of Home Builders.
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The U.S. labor market bounced back in March to reverse February's losses. While the headline was positive, the U.S. has not posted consecutive months of job gains since April and May 2025. A bad month of growth has followed a good one the past year, and that was before the potential economic impact of the conflict in Iran.
- Headline Growth: The economy added 178,000 jobs in March, roughly three times higher than economists predicted. Average hourly earnings were up 3.5% from the prior year, still in a solid range to support rent growth for areas where multifamily demand and supply are in balance.
- Industry Divergence: Healthcare added 76,000 jobs, and about half of it was from physicians returning to work after striking. Leisure and hospitality added 44,000 jobs and construction added 26,000. The federal government (-18,000) and financial activities (-15,000) lost jobs.
- Shrinking Workforce: The unemployment rate ticked down to 4.3%, but largely because the labor force shrank by 400,000 people. The labor-force participation rate fell to 61.9%, its lowest level since 1977 when excluding the pandemic era.
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Economic Headlines
The economic narrative has shifted from "gradual recovery" to "geopolitical volatility" as conflict in the Middle East continues to dictate the pace of inflation and interest rates. For multifamily operators, the immediate impact remains the "inflation tax" on renters’ wallets, weaker job creation, and the subsequent effect on 2026 occupancy and rent growth.
· Energy Volatility: After a volatile week, Brent Crude oil climbed back above $106/bbl this morning as hopes for an immediate ceasefire in the Middle East faded. While the national gasoline average has finally plateaued at $3.98/gal—marking its first daily decline this month—consumers are still grappling with prices roughly $1.00 higher than they were 30 days ago.
· Capital Markets: Markets remain under pressure, with the S&P 500 down 5% and the Dow down nearly 6% from late February highs. Investors are increasingly defensive as "stagflation" fears move to the forefront, driven by a combination of high energy costs, sticky inflation, and a cooling labor market.
· Mortgage Rates: The 30-year fixed-rate mortgage (FRM) has jumped to 6.49% according to Bankrate, its highest level of 2026. While the lack of affordability in the owner-housing market boosts renter demand, the overall impact is a drag on the economy.
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Economic Headlines
Impacts related to the conflict in the Middle East continue to dominate economic headlines. All data stated are based on the publication date of this report, and they are subject to change.
· Crude Oil near $100/bbl: Up $30 since late February.
· Gasoline at $3.72/gal: An 80-cent jump in 30 days.
· Market Volatility: S&P 500 -2.4%; Dow -4.1% since the conflict began.
· Mortgage Rates: Increased from 5.98% to 6.11%.
Rising mortgage rates and market volatility are increasing the cost of homeownership, forcing many renters to delay their purchase plans and stay in the rental market longer. While this supports steady occupancy, the "inflation tax" on wallets from higher everyday costs may limit rent growth this year.
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Labor Market Loses Momentum
The February jobs report was weaker than expected, with the U.S. losing 92,000 jobs and falling well short of the growth economists projected. While the unemployment rate remains relatively low at 4.4%, the widespread nature of the decline—hitting everything from healthcare to construction—suggests a softening that could eventually impact renter household income and overall consumer confidence.
For multifamily operators, this is a troubling signal heading into leasing season. Job growth is key to absorbing new supply and increasing occupancy rates, but employment has declined in three of the past five months.
If this trend continues, it may push the Federal Reserve to reconsider rate reductions sooner than planned to help stabilize the broader economy, but inflation is facing a new challenge that is part of that decision.
Consumers’ Pain at the Pump
On top of the labor news, the military campaign in Iran has led to the closure of key global shipping lanes, creating immediate ripples in the energy market. We’re already seeing these disruptions translate to higher prices at the pump, which effectively acts as a "stealth tax" on consumers and can tighten the discretionary budgets of renters.
At the time of this publication, AAA reported that the national average price for a gallon of regular gas was $3.58, up from $2.94 a month ago.
As gas prices climb, the Fed finds itself in a difficult spot—trying to manage a cooling job market while simultaneously watching for inflation risks driven by energy costs. For asset managers, this means the "higher-for-longer" interest rate environment might have a more complicated exit strategy than we hoped for at the start of the year.
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Prior to increased global tensions, mortgage rates hit a milestone as the average 30-year fixed-rate dropped to 5.98% last week—the first time the metric has dipped below 6% since September 2022.
This slight decline from 6.01% the prior week (and 6.76% a year ago), paired with rising inventory, is expected to pull buyers off the sidelines if the lower mortgage rates persist or continue to decline. Additionally, Freddie Mac reports that refinancing applications have already doubled year-over-year.
A resurgence in housing activity can add fuel to the broader economy. Refinancing frees up thousands in annual interest payments for consumer spending, while increased home sales drive job growth for supporting industries.
As an example, Mohawk Industries’ CEO was recently quoted in The Wall Street Journal: “U.S. consumers [spend] an estimated five times as much on remodeling their flooring in the first year after buying a home than non-movers.”
While these lower rates are a welcome reprieve for housing, the developing unrest in the Middle East remains a significant wildcard. We expect to see the first impacts reflected in energy costs at the pump, but the long-term effect on inflation and bond yields—and by extension, mortgage rates—remains to be seen.
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Major upgrades to Radix’s market intelligence
This week, we've integrated millions of new public data points into our Research product, adding tens of thousands of properties to our Radix Analytics platform for a more comprehensive look at shifting dynamics within specific MSAs and submarkets.
All data is based on publicly available information, including RealRents. These properties were previously available for individual benchmarking analysis and are now also included in our aggregate trends.
With expanded market coverage, your management and investment decisions are now more informed than ever.
More enhancements are on the way.
This update is a key milestone in our ongoing data evolution. As we continue to enhance our platform, you can anticipate further advancements to our market intelligence in the months to come. We look forward to helping you navigate these evolving trends with our most robust dataset to date.
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The first half of February delivered a wave of favorable economic data, painting a more optimistic picture for the start of the year than many analysts predicted. The combination of cooling costs and a resilient labor market provides a strong foundation for the housing sector as spring approaches.
Inflation inched closer to the Fed’s target of 2.0%. The Consumer Price Index (CPI) rose 2.4% year-over-year in January, the slowest pace since last May. Significant relief came from lower gasoline prices, a high-visibility win for consumer sentiment that provides immediate breathing room for household budgets.
The Core CPI, which excludes volatile food and energy prices, increased 2.5%, marking the lowest growth rate for this metric since April 2021. This suggests that the underlying inflationary pressures that have plagued the economy for years are finally stabilizing.
January’s labor market report outperformed expectations. Approximately 130,000 jobs were added in the month, and the 4.3% unemployment rate indicates a sturdy labor market. Paired with robust wage growth of 3.7%, renters and buyers alike are entering the year with stronger purchasing power than anticipated.
The strength of job creation has been overstated in recent years, but if last week’s report is accurate, it bodes well for an economy that had a lot of question marks heading into 2026.
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The labor market kicked off 2026 with a surprising 130,000 new jobs in January based on today’s report from the Bureau of Labor Statistics. It was more than double economists’ expectations.
From an industry perspective, health care and social assistance (+124,000) and construction (+33,000) were major winners for monthly job gains. The federal government (-34,000) and financial activities (-22,000) lost jobs.
While the overall number is great news to start 2026, many will wait and see if these figures hold given the number of downward adjustments in recent years.
Based on the annual benchmark revisions released today, the monthly job gains for 2025 averaged just 15,000 per month, and practically every month was adjusted lower than previously reported.
That said, if these numbers are accurate, they bold well for demand for the multifamily industry this year. Strong job creation would help absorb excess supply totals from recent years. If hourly earnings remain close to January's annual growth of 3.7%, rent growth should bounce back as occupancy rates stabilize.
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The U.S. Census Bureau’s first look at 2025 population data revealed a significant cooling trend. As of July 1, 2025, the U.S. population grew by 1.8 million from the prior year, or 0.5%. It was a sharp deceleration compared to the prior year’s 1.0% gain of 3.2 million people. Analysts attributed much of the change to a substantial decline in international immigration.
The slowdown in overall population growth was particularly relevant for the multifamily sector because it influenced demand for housing.
From a regional perspective, the Midwest has been a standout for multifamily operations performance in recent years. Low supply has helped, but Census data suggested strong demand as well. All states in the region recorded a population gain in 2025, aided by slightly positive domestic migration which had been negative for years.
At the state level, South Carolina led the nation with 1.5% population growth, but it was down from 1.8% the prior year. Idaho and North Carolina followed closely at 1.4% and 1.3%, respectively.
Texas led the U.S. in total population gain with more than 391,000 residents. While lower than recent years, it was essentially twice as many as Florida which had the second highest amount of 197,000.
Only five states saw a population contraction: California, Hawaii, New Mexico, Vermont, and West Virginia.
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Winter Storm Fern wreaked havoc on the U.S. this past week, with early estimates predicting more than $100 billion in total economic losses.
According to MarketWatch, analysts from Morgan Stanley believe the storm’s disruption could shave 0.5 to 1.5 percentage points from Q1 GDP, potentially obscuring the true strength of the economy.
Some people reading this planned to attend a major multifamily conference in Las Vegas this week, but they were significantly delayed or completely unable to make the trip due to the weather impact. I was part of the latter.
Based on data from FlightAware, there were approximately 24,000 cancellations for flights within, into, or out of the United States from Saturday through midday Tuesday. To put that in perspective, cancellations averaged 350 per day last year.
The timing of the storm also coincides with earnings season for publicly traded companies. On upcoming investor calls, expect some of the multifamily REITs to discuss any disruptions to performance and damage to properties, as well as how they are mitigating them.
Broadly, there will likely be a temporary slowdown to in-person property traffic in locations where Fern hit the hardest. That could show up to a degree in Radix data starting this week and next.
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This week's RAOT As of January 18, annual rent growth for multifamily was 1.8% at the national level. The U.S. occupancy rate was stable at 92.8%.
Also in this week's report, a recent survey of economists showed an improved outlook for job growth and a lower chance of recession in 2026.
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The U.S. labor market ended the year with an unemployment rate of 4.4%, reinforcing expectations that the Fed will keep interest rates steady at its meeting later this month.
While the jobless rate was low, it was a lackluster year of job gains, which is a trend that could persist in 2026.
Employment increaed by 50,000 jobs from the prior month in December on a seasonally adjusted basis. Of the 525,000 jobs gained for the full year, it was very front loaded as approximately 84% of the jobs were added during the first four months of the year.
If you are in search of optimism after that report, some economists point towards a couple of factors that could benefit the economic outlook for 2026.
The economy is expected to gain momentum due to the delayed effects of late-2025 rate cuts and the tax incentives of the One Big Beautiful Bill Act. While these tax cuts are expected to outweigh the cost of recent tariffs, the bill’s reduction in certain social programs remains a point of concern for low-income demographics.
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While 2025 might be in the rearview mirror, many of its economic trends carry into 2026. These are a few to watch that influence demand for multifamily.
Can the labor market rebound and spur household formation? It was one of the biggest disappointments of last year, with essentially no job growth after April. Supply will be lower than recent peaks, but it won’t completely disappear. Many markets in the Southeast and Southwest regions rely on strong job creation and migration to fill those units.
How might a continued “K-shaped” economy impact rent growth? While consumer spending helped boost GDP in 2025, there was a significant divide based on income levels. Much of the spending was from top earners, while those with more moderate incomes were sensitive to inflation on essentials such as food and utilities. This trend could be a headwind for revenue growth, especially for properties with mid-to-lower rent levels.
Will the frozen single-family market start to thaw? Existing home sales saw a slight rebound near the end of 2025, but they remained well below normal levels. The typical first-time home buyer is now 40 years of age, a record high. While the lack of affordability has kept people in rental housing longer, a positive for demand in the industry, it likely stunted job growth and spending that would have helped the broader economy.
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The year ended with a strong reading for U.S. gross domestic product (GDP) growth. Last week, the Bureau of Economic Analysis announced its preliminary reading of 4.3% annual growth in GDP for Q3 2025. It significantly outperformed expectations and was the highest in two years.
The government shutdown happened after the reporting period, and it will impact the Q4 GDP results. Still, it indicated a stronger economy through September than many headlines suggested.
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Existing home sales rose for the third consecutive month in November based on data from the National Association of Realtors.
The seasonally adjusted total of 4.13 million homes sold in the last year was the highest since February, but it remained well below prior norms. From 2013 to 2023, existing home sales typically eclipsed 5 million per year.
An article published by the Wall Street Journal noted that 54% of primary mortgage-holders have mortgage rates at or below 4%, which represents close to 30 million households.
It appears the locked-in effect for single-family homes will continue next year. The Mortgage Bankers Association recently forecasted that mortgage rates will average 6.4% in 2026, giving very little relief to the lack of affordability in the for-sale home market.
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The U.S. Bureau of Labor Statistics released its initial estimates for November’s job growth. Nationally, employers added a total of 64,000 jobs for the month, but other details in the report pointed towards a weakening labor market as the year ends.
The unemployment rate increased to 4.6%, the highest in more than four years. In the last six months, the U.S. has only created a total of 100,000 new jobs. During normal periods of economic growth, the job market would eclipse that total practically every month rather than taking half a year to achieve it.
Broadly, the private sector has performed better than the overall total. Through the first 11 months of the year, the private sector added 766,000 jobs while the government lost 156,000 jobs.
Within those subsets, health care added 400,000 of the private sector jobs on a year-to-date basis, meaning growth was less than spectacular for most other industries. The federal government lost 268,000 jobs, but it was partially offset by local governments adding 147,000 jobs so far this year.
As usual, the report is subject to further revisions, but the softness in the labor market is undeniable at this point. Fed Chair Jerome Powell recently noted that the job numbers reported could be overestimated by 60,000 per month.
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The Fed cut interest rates by 25 basis points today, putting the target federal funds rate in the range of 3.50% to 3.75%. The recent peak was 5.25% to 5.50% in July 2023.
Additional cuts in the near term could be more difficult as the committee members were already divided on this decision to lower rates. More data indicating substantial weakness in the labor market and economy will likely be needed to sway future votes.
Ahead of the vote, ADP estimated that employment in the private sector declined by 32,000 jobs in November and small businesses took the brunt of the losses. Yesterday’s BLS report noted a slight uptick in layoffs in October, and multiple prominent companies announced terminations in November.
Consumers hoped that the cuts by the Fed the last year-plus would instantly lead to significantly lower mortgage rates, but the declines have been more modest. The average 30-year fixed-rate mortgage was still 6.19% last week according to Freddie Mac, and it has not been below 6% since September 2022.
Mortgage rates tend to more closely follow the 10-year Treasury’s longer-term yield, which has remained elevated for a variety of reasons, including anticipated inflation impacts.
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This week, the Organization for Economic Co-operation and Development (OECD) released its latest outlook for U.S. and worldwide growth for 2026. The general sentiment is that economic growth will remain positive next year, but it will moderate in the U.S. and most other countries.
GDP in the U.S. is projected to slow from 2.0% in 2025 to 1.7% in 2026. Headline consumer price growth in the U.S., also known as inflation, is expected to rise from 2.7% in 2025 to 3.0% in 2026 before moderating to 2.3% in 2027.
From a multifamily perspective, the higher prices for goods and services are a threat to rent growth bouncing back next year after a sluggish 2025.
The report also noted downside risks to the U.S. labor market in the near term, as well as reforms needed to boost housing supply and infrastructure.
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Labor market reports released after the government shutdown present a mixed picture for the Federal Reserve's interest rate decision on December 10.
On a positive note, the Bureau of Labor Statistics reported 119,000 new jobs were added in September on a seasonally adjusted basis, more than double what many economists expected, but there was a downward revision of 33,000 jobs combined for July and August.
The unemployment rate was 4.4% in September. It remained low by historical standards, but it was higher than any period since late-2017 other than 2020-2021 which was impacted by the pandemic.
Another good sign is that initial unemployment insurance claims remained at a normal level through the week ending November 15 despite announcements of layoffs from several prominent companies.
Unfortunately, continued claims for unemployment were up by approximately 100,000 from the prior year. As of November 8, the weekly level reached almost 2 million and it was the highest since 2021. The trend suggests those losing their job are having a harder time finding their next role.
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As part of the wide-ranging impact of the government shutdown, many standard economic reports were not published during the last several weeks. Even though alternative sources were leveraged for some indicators, the situation still created uncertainty for markets and policymakers.
Now that the government has reopened, key reports for September and October 2025 are rescheduled for release starting this week and into December. That includes new, but significantly delayed, information on national job growth this Thursday.
Analysts must contend with reports being based on incomplete or missing data, especially for October, which complicates the assessment of current economic health. Many of the initial, market-moving numbers will be subject to further revision, which already presented challenges before the shutdown.
The Fed’s final meeting of the year is in just three weeks. The committee will likely have to rely on multiple data sources to piece together a clear view of the economy's direction while deciding on a change in interest rates.
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As of the production of this report, it appeared the U.S. government was on the brink of re-opening, which will hopefully improve the outlook for consumers.
The University of Michigan’s consumer sentiment index for November 2025 was almost at a record low based on preliminary data, just above the reading from mid-2022 when inflation spiked.
Pessimistic consumers are typically concerned about their future finances, leading them to spend less and slow the economy. That mindset could also apply to their budget for housing, which tends to be the largest monthly expense.
Several well-known companies recently announced layoffs, and this week’s report from ADP indicated the labor market softened in the back half of October. The payroll processor reported an average of 11,250 private-sector jobs were lost per week in the four weeks that ended on October 25th.
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The typical first-time home buyer in the U.S. was 40 years of age, an all-time high, according to an annual report released this week from the National Association of Realtors. The surveys were based on transactions between July 2024 and June 2025.
Additionally, only 21% of purchases were from first-time buyers, an all-time low and roughly half of the 2007 figure.
From a multifamily perspective, rental housing is now capturing adults for approximately an extra decade longer than it used to, primarily due to affordability and lack of inventory. While that is a boost to rental housing demand, the trend has been a drag on the economy and job market.
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This week’s top stories presented a stark contrast: record highs on Wall Street alongside high-profile layoff announcements. Meanwhile, the Fed is set to decide on interest rates without all the normal data at its disposal due to the ongoing government shutdown.
Hiring totals have been weak for U.S. companies, but terminations have largely been slow as well. This week, UPS said it cut 48,000 jobs in management and operations positions. While it had already signaled the move earlier in the year, the total was higher than previously announced.
Amazon is expected to remove 30,000 corporate jobs, many of which occurred this week. Target is slashing 1,800 corporate roles through a combination of layoffs and not filling open positions.
Despite the pessimistic news on the jobs front, the three major indexes on Wall Street all hit record highs this week. Investor optimism was fueled by a variety of factors, including new trade deals and recent corporate earnings.
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Based on a Wall Street Journal report, the number of unemployment claims filed by federal workers jumped significantly in early October. The federal government remained closed as of the publication of this report, but unemployment insurance claims are reported by state offices.
In the week prior to the shutdown, only 588 federal government workers filed an initial unemployment claim. That number jumped to a total of more than 10,500 for the last two weeks combined. The increase in claims was driven by those that were temporarily furloughed, but it also included workers that took a deferred-resignation plan earlier in the year.
While U.S. hiring has generally been weak, the lack of available labor is one of the main challenges. Workers on leave from government jobs could potentially look to other industries for roles that require a similar skill set. In its most recent report, the Bureau of Labor Statistics reported there were close to 6.5 million jobs open in the private sector.
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The Wall Street Journal published the results from its quarterly survey of economists this week. Overall, the group projected the economy will continue to grow, unemployment will remain low, but job growth will be weak in the near term.
Focusing on the last point, 57 economists submitted their U.S. job growth projections for the next 12 months. The average for the group was approximately 50,000 jobs created per month, or 600,000 total jobs for the next year. Other than during the pandemic, annual job gains have typically been at 2 million or higher since the end of 2011, but it has been below the level practically all this year.
The unemployment rate, which was last reported at 4.3%, is projected to stay in the range of 4.2% to 4.5% the next couple of years. While that is generally good news, the amount of hiring will be limited due to the size of the labor force.
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The ongoing government shutdown continues to dominate news cycles on a variety of fronts. One of its impacts last week was the lack of a national jobs report from the Bureau of Labor Statistics. In its absence, many are turning to alternative measures to monitor the health of the job market.
ADP reported that private-sector employment declined by 32,000 jobs in September. The company processes the most payrolls in the U.S., and it estimated the companies with fewer than 50 employees took the brunt of the job losses, losing 40,000 jobs while larger companies added to payrolls. From an industry standpoint, the leisure and hospitality sector lost 19,000 jobs.
Other sources, from Indeed’s job listing platform to Wall Street analysts, tend to tell a similar story. The job market remains sluggish, if not fragile. On a positive note, layoffs are in a normal range, but an acceleration in the job market appears questionable in the near term.
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With Q3 2025 wrapping up this week, the most notable performance stat for the quarter was the deceleration in rent growth. At the U.S. level, annual effective rent growth slowed from 1.2% at the beginning of the quarter to 0.6% in the last two weeks of September.
Now, the focus turns to how fundamentals change in Q4, and how that impacts the outlook for 2026.
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Annual effective rent growth slowed to 0.6% at the U.S. level in this week's report. After peaking at 1.2% in July, rent growth has gradually decelerated, suggesting demand has softened by some degree relative to this time last year.
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Multifamily operational performance remained in line with recent weeks. Annual effective rents were up 0.8%, but practically all of the gain occurred at the beginning of the year.
Also in this week's report, key economic headlines related to inflation, mortgage rates, and layoffs.
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Budget bootcamps are underway, and this week's reports has the latest operational trends by market. Rent growth is ticking down, and occupancy will be starting 2026 at a lower rate in many markets.
Also, in this week's summary we review the latest massive revisions to job growth that were released a week ahead of the Fed's major decision on interest rates.
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A new forecast released last week shows three industries will outperform for job growth during the next decade. The tech, health care, and energy sectors are expected to grow at a faster pace than the national average. A slower pace of overall job growth will likely influence how much new supply is needed, and in which locations.
As for the latest week’s operational results for multifamily, annual effective rent growth was 0.9% at the national level, and the occupancy rate was 93.5%.
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Ahead of Friday's release of the national jobs report from the BLS, multiple articles this week have focused on AI's impact on the job market, including for recent college graduates.
Listen to this week's report for a summary, as well as the latest multifamily results.
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The latest report from the U.S. Bureau of Labor Statistics showed several markets in the Carolinas at the top of the list for job growth, including Charleston, Raleigh, Charlotte, and Columbia. Wilmington and Greenville also outperformed the national average. Overall, it should be a boost for multifamily demand in the region.
Listen to this week's report for more notes on the job growth rankings, including a handful of markets that are losing jobs.
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Annual effective rent growth improved to 1.2% at the U.S. level last week. While that is considered modest by historical standards, it is the strongest national growth rate since the end of 2022.
See this week's report for the latest trends for multifamily, as well as the latest numbers for inflation which could impact operating costs and rent growth...
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Multifamily operational performance has been very steady at the national level. Annual effective rent growth has held steady at 1.0% throughout June, and the occupancy rate appears to be peaking at just above 93.7%...
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U.S. job growth was better than expected for May, but there were 279,000 fewer jobs created during the first five months of 2025 compared to 2024. That has likely been one of the reasons occupancy rates have not rebounded in many markets the way we expected them to this year...
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Heading into the summer, most multifamily markets showed significant improvements compared to a year ago. At that point, rent growth was still deteriorating and supply had yet to peak in many markets. While effective rent growth is far from robust in most places, it's positive in most places.
While effective rents were still below last year's level in several markets at the end of May, the year-over-year declines were typically much milder.
At a national level, effective rents were up 0.9% from a year ago and the occupancy rate was 93.7%. Markets such as Chicago, Seattle, and Washington, DC outperformed the U.S. benchmark for both metrics...
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Last year, weekly traffic for multifamily properties peaked during the first week of May at a national level, and it appears the pattern could be repeating again in 2025. Traffic counts have been down slightly in the last two weeks, and they are back to levels from early March.
In 2024, the U.S. occupancy rate peaked approximately eight weeks after traffic began to decline, which is not surprising since traffic is a leading indicator...
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Annual effective rent growth was 0.8% for the U.S., and the average occupancy rate was 93.67%. While multifamily performance has certainly improved in many markets compared to a year ago, improvements in the national average have somewhat stalled since the beginning of leasing season...
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The latest U.S. jobs report was stronger than expected, especially given the generally economic uncertainty often echoed by media reports. While there are a few caveats to the report, the positive tone should not have been too surprising given the recent performance for multifamily.
U.S. annual effective rent growth was 0.9% for the latest week, but many markets and submarkets have returned to growth rates of at least 3.0%. Annual wage growth was 3.8% in April, which should help rent growth normalize as supply and demand become balanced in more locations...
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Multifamily operational performance remained steady from the prior week and showed no signs of demand being impacted by headlines about the economy.
Nationally, effective rents were up 1.0% from the prior year and the average occupancy rate was just under 93.7%.
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Annual effective rent growth for multifamily increased slightly to 1.0% for the U.S. average. Occupancy checked in just above 93.7%.
This week's report also details how job growth expectations have changed for 2025, which could impact demand for housing this year.
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Tariffs have dominated headlines. In this week's report, we cover the recent developments and how they could potentially impact demand for multifamily housing...
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While U.S. annual effective rent growth averaged just 0.5% in Q1, it was much better than the -3.3% growth a year ago. Rent growth was still negative in some markets, but the pace improved from the prior year in 35 of 45 markets.
Check out this week's report for the latest stats, as well as one factor that is likely contributing to higher resident retention...
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According to a recent report from the National Association of Realtors, 4.26 million homes were sold in February on a seasonally adjusted basis. The total was up 4.2% from the prior month, and it was stronger than the 3.2% increase expected by economists surveyed by The Wall Street Journal.
Despite the strong sequential growth in sales, the volume was down 1.2% from a year ago and the industry continues to struggle with high mortgage rates and asking prices. In 2024, home sales were at the lowest level since 1995, and the median age of first-time homebuyers jumped to 38 years old. ..
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The new administration is rapidly implementing many of the policies touted on the campaign trail. While the changes are meant for the long-term impact, consumers are becoming worried about the economy in the near term with so many large movements in a short period.
Tariffs, job cuts in the federal government, changes in government funding, and other factors led to the University of Michigan’s survey of consumer sentiment to drop significantly in March. The latest reading of the index was at 57.9, which was down 11% from the prior month and 27% below a year ago. It was the lowest level of the index since November 2022...
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The U.S. labor market added 151,000 jobs on a seasonally adjusted basis in February according to last week’s report by the Bureau of Labor Statistics (BLS). While the number was roughly 20,000 to 30,000 jobs below economists’ expectations, it was stronger than the 125,000 jobs added in January.Other macro indicators, such as a tight unemployment rate of 4.1% and strong annual wage growth at 4.0%, were steady from prior reports.If the job growth, unemployment rate, and wage growth numbers hold throughout the year, they would create significant demand for housing...
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Last year’s home sales were at lowest level in almost 30 years
A recent report by The Wall Street Journal cited preliminary data from the National Association of Realtors. High prices and elevated mortgage rates were among key factors causing existing home sales to decline to 4.06 million in 2024, down slightly from 4.09 million in 2023.
For comparison, the years during the Great Recession even had a slightly higher volume of home sales compared to 2024. At least 5.0 million existing homes were sold per year from 2015 to 2022.
The national median home price was $404,000 in December 2024, up 6% from the prior year. A lack of inventory was a key factor for increased home prices despite higher mortgage rates.
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Job growth to slow in 2025, but remain positive
This week’s economic analysis will focus on the results of the quarterly survey of economists byThe Wall Street Journal, which includes aggregated forecasts of more than 70 economists.
The report, which was released last weekend, showed the chance of a recession was just 22% for2025, the lowest since January 2022. The average projection for job growth was approximately 1.6 million for 2025, down from roughly 2.2 million jobs in 2024 based on recent data from theBureau of Labor Statistics (BLS).
The supply of available labor is expected to remain tight with an expected unemployment rate of 4.3%. Growth in the labor force continues to be a limiting factor for job growth.
For multifamily operations, the good news is the potential of slowing job growth coincides with a certain slowdown in new multifamily deliveries, which should reduce the effects of supply and demand getting out of balance...
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Job growth closes 2024 unexpectedly strong
The U.S. labor market added 256,000 jobs on a seasonally adjusted basis in December according to last week’s report by the Bureau of Labor Statistics (BLS). The growth was much stronger than the roughly 150,000 jobs expected by economists. The unemployment rate remained low at 4.1%.
On one hand, it is a great sign to see robust job gains, especially for those that have been unemployed for a significant time. It is also beneficial for multifamily because job growth contributes to household demand.
The downside is the continued strength might also delay further interest rate cuts by the Fed in the near term, which can cause other ripple effects. The S&P 500 and Dow Jones Industrial Average both trended lower after the release of the jobs report.
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U.S. Annual Effective Rent Growth Turns Positive
The Bureau of Labor Statistics (BLS) will release its final national jobs report this Friday. In all, the labor market was much stronger in 2024 than many economists predicted. The final report should show roughly 2 million jobs were added last year, and the unemployment rate hovered in the low 4% range.
Economists will be anticipating upcoming releases in February and March when the BLS provides its annual revisions to job growth for the U.S. and metropolitan areas. Based on initial estimates announced last summer, there could be some significant revisions to the previous totals, and the new numbers could reshape forecasts for operational performance for multifamily by some degree.
While elevated supply totals had a major impact in 2024, the BLS’s revisions could help explain why some markets underperformed in a year when so many jobs were supposedly added...
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U.S. job growth bounced back in November
After a dismal report for October, job gains were strong in November with 227,000 jobs added to the U.S. economy on a seasonally adjusted basis. It outperformed the consensus expectations of approximately 200,000 jobs.
October’s report of 12,000 jobs added, which was revised up to 36,000 jobs, was influenced by special circumstances related to two hurricanes, a strike by Boeing workers, and a short survey collection period. In total, job gains for the prior two months were revised up by 56,000 jobs.
Job creation is one of the biggest drivers for housing demand, including multifamily. Job growth in 2025 is likely to resemble a pace like the past six months, which has been 143,000 jobs added per month. With lower levels of new supply, and many markets already on the upswing, national average effective rent growth should trend closer to 3% by the end of the year.
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Consumer confidence reaches a 16-month high
Based on a report from the Conference Board, consumer confidence improved in November to one of its highest levels in the last three years. An optimistic outlook on the labor market, a declining risk of a near-term recession, and expectations of lower inflation all contributed to the improvement.
The cutoff date for the preliminary results was November 18, which means the outcome of the U.S. election on November 5 factored into many of the responses. While consumers generally believed inflation would head towards a lower rate, some economists warn that tariffs and other policies from the Trump administration could keep inflation at a higher rate.
Retail sales were strong to start the holiday shopping season
Spending by holiday shoppers last week echoed the improved consumer confidence reading. According to data from Adobe Analytics, consumers spent $10.8B on Black Friday this year, upfrom $9.8B the prior year. Thanksgiving Day also set a record with $6.1B in sales, up by 8.8% from the prior year.
Consumer spending represents approximately 70% of the U.S. economy, and this holiday season’s totals should bode well for GDP to close out the year. Consumer spending grew by a healthy 3.5% in Q3 2024 based on last week’s report from the Commerce Department.
Job growth should bounce back in this week’s report
The Bureau of Labor Statistics will release its report on November’s employment growth for the U.S. on Friday. Last month’s report was the most dismal in a few years, but some special circumstances influenced the results. Hurricane impacts, worker strikes, and a shorter collection period weighed on the numbers.
Forecasts for November’s job gain are in the 150,000 to 200,000 range. In October, only 12,000 jobs were added. An equally troubling note from last month’s report was that job growth for August and September was revised down by a combined 112,000 jobs. As mentioned, consumers remain optimistic about the labor market despite previous month’s results.
Multifamily Highlights
Leasing activity continued to be steady in last week’s report, a trend that has been consistent since September. Multifamily operational benchmarks are displaying normal trends for this time of year, setting up for improved performance in many locations in 2025.
Annual effective rent growth had a slight downtick and was at -0.3% in this week’s report, but it is still in much better shape than earlier in the year. Comparing average annual rent growth for November to the third quarter’s average, 31 of 45 markets showed improved performance. Of course, many markets still had negative annual growth, but most are headed in the right direction.
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This is a weekly narration of our weekly Rent and Operating Trends Report.
Existing home sales picked up in October
Based on a report from the National Association of Realtors, existing home sales increased 3.4% from September to 3.96 million in October on a seasonally adjusted annual basis. The annual volume of home sales had declined in six of the previous seven months. Sales were up 2.9% compared to October 2023.
The median existing home price increased 4.0% at a national level, but it was up 7.6% in the Northeast and 7.2% in the Midwest. Prices were up just 0.9% in the South. The West was in between those rates at 4.4%.
Interestingly, multifamily operational performance this year has had a similar theme in the regional rankings. The Northeast and Midwest regions have consistently been the strongest. Many markets in the West have rebounded, and the South has several markets that continue tostruggle from an imbalance of supply and demand.
The pickup in home sales occurred after the first of two recent interest rate cuts by the Fed, but mortgage rates have increased steadily since the end of September.
Permitting levels for multifamily are down 21% from a year ago
According to data from the Census Bureau and HUD, the total number of residential units permitted during the last 12 months was down 7.7% from the prior year. The drop was almost exclusively driven by a decline in the multifamily industry.
There were 393,000 multifamily units permitted in the 12 months ending October 2024 on a seasonally adjusted basis. It was one of the lowest levels in the past decade, and it was down 20.9% from 497,000 units permitted in the year ending October 2023. The decline will set up a period of fewer deliveries in the coming years, and it will likely lead to improved operational performance in many markets.
Single-family permitting was down just 1.8% from the prior year with 968,000 units permitted in the last 12 months. Looking at all types of residential construction, the Midwest region had the biggest gains in the last year with an increase of 10.9%.
Numbers to watch this week
Even with the Thanksgiving holiday this week, there are still some notable reports that will be published.
The Conference Board released its Consumer Confidence Survey today, which includes surveys completed after the U.S. presidential election.
The Personal Consumption Expenditures Index, which is the Fed’s preferred measure of inflation, will be released on Wednesday.
The Bureau of Economic Analysis will publish its second estimate of GDP for the third quarteron Wednesday. The initial estimate was 2.8% growth, which was down slightly from the previous quarter, but was still considered to be at a strong level. Consumer spending is the biggest driver of GDP growth, and the Census Bureau recently revised retail sales upward for the month of September.
Multifamily Highlights
Operational metrics remained steady from the prior week, with slight declines due to normal seasonality. National annual effective rent growth had a slight tick downward after last week’s report of flat growth, but annual changes in effective rents and occupancy should turn positive by early 2025.
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Slight Uptick in Inflation, but U.S. Economy Still in Good Shape
Based on data from the Bureau of Labor Statistics, consumer prices increased 2.6% in October from the prior year. Core prices, which exclude food and energy, increased 3.3% on an annual basis. Both numbers met economists’ expectations. Despite a slight increase in the headline inflation number, the report was viewed favorably by investors.
Compared to a year ago, gasoline prices were down 12.2% in October and there was a slight decline in vehicle prices. Prices were up 4.5% for electricity and 8.2% for transportation services.
Rent growth for multifamily should come back into balance due to normalizing growth in consumer prices, strong wage growth, and a decline in new supply levels.
Strong Retail Sales to Start Q4
The Commerce Department reported retail sales increased 0.4% monthly in October, and September’s growth was revised upward to 0.8%. It was a good sign headed into the holiday shopping season. Some of the strongest growth was in electronics and appliance stores, as well as auto dealerships.
According to a Reuter’s report, investors lowered the odds of the Fed cutting interest rates in December after the retail sales report. They dropped from roughly a 70% chance to about 60%.Multiple economic readings suggest the economy could be strong enough without the extra boostfrom the Fed next month.
New Housing Data Released This Week
The U.S. Census Bureau’s latest housing report for new home sales and permits for residential construction, including multifamily, will be released today. The National Association of Realtors will release its monthly report on existing home sales on Thursday.
New supply readings for multifamily have trended downward throughout the year, setting up a window of lower supply in coming years. The single-family market has remained very unaffordable due to escalated prices and persistently high mortgage rates.
Multifamily Highlights
Operational metrics were steady from the prior week, and it appears 2025 could be a bounce back year for many markets if the economy remains strong. So far, the industry has avoided any unusual erosion in performance through the first half of the fourth quarter.
Leasing activity has been consistent each week since early September, and national annual effective rent growth had its first non-negative reading in 19 months. Rent growth was flat from the prior year, and it has showed incremental improvements since midsummer.
The usage and value of concessions has receded in many markets on the front end of the industry’s recovery from sluggish performance last year.
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Fed Cuts Rates Again, Notes Low Growth for Market Rents
The federal funds rate was lowered by 25 basis point last week following a 50-point cut in September. The Fed is trying to keep the labor market in solid shape while also managing inflation.
Discussing inflation, Fed Chair Powell made a reference to the rental housing market. In summary, he said there is low inflation for market rents on new leases. That observation isconsistent with the readings from Radix data. At the national level, effective rents are still lower than they were at the end of 2022.
Mortgage Rates Head the Other Direction
It might seem counterintuitive, but mortgage rates have increased for six consecutive weeksdespite the Fed lowering the federal funds rate. According to Freddie Mac, the average interest for a 30-year fixed rate mortgage increased from 6.08% in late September to 6.79% last week. Itwas the highest mortgage rates have been since July.
Mortgage rates are influenced by Treasury yields. A strong outlook for the economy can lead tohigher yields which puts upward pressure on mortgage rates, especially if inflation increases.
This trend continues to impact the for-sale housing market, while providing some benefit to rental housing demand. Freddie Mac noted that home purchase applications have dropped 10% since mortgage rates started to increase in early October.
Numbers to Watch This Week
The U.S. presidential election has dominated news cycles, but a few notable economic reports will be released this week.
October’s results for the consumer and producer price indexes will provide the latest reading on inflation. The Commerce Department will release its report on last month’s retail sales as the holiday shopping season gets into swing. Consumer spending has been strong and it contributed to the better-than-expected GDP growth for Q3 2024.
Multifamily Highlights
Annual effective rent growth was on the doorstep of positive territory in this week’s report. At the U.S. level, effective rents were down a mere 0.1% from the prior year. One of the reasons for the improvement in rent growth the past few months has been a decline in concessions.
Effective rents are up at least 4.0% from a year ago in Baltimore, Boston, Chicago, Columbus, Detroit, New York, San Jose, and Seattle. Many of the top performing markets have seen a gradual easing of concessions throughout the year.
In San Jose, the average concession value peaked at close to $180 per unit a year ago. The market’s average was just below $40 per unit last week. In Chicago, it went from almost $50 per unit last December to $10 in the current report.
Those numbers are based on the average of all floor plans and properties whether they use concessions or not. Expect to see this trend continue as multifamily fundamentals come back into balance.
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U.S. Job Growth Slowed Significantly in OctoberBased on last week’s report from the Bureau of Labor Statistics (BLS), the U.S. labor market added 12,000 jobs in October. It was the lowest monthly total since December 2020, but sluggish growth was expected due to some special circumstances.
Impacts from the hurricanes, a strike by Boeing workers, and a shorter collection period of employer data all contributed to the lower reading. There is a chance November shows a bounce back as those trends normalize.
The other pessimistic note in the report is that job gains for the prior two months were revised down by a combined 112,000 jobs.
Interestingly, ADP’s estimate of job gain was incredibly strong at 233,000 for October.
The Overall Economy Remains Very StrongWhile last week’s labor market report was subpar, the Bureau of Economic Analysis reported GDP growth of 2.8% for the third quarter. While the rate was slightly below last quarter’s growth of 3.0%, it still suggests the economy is robust.
The number was boosted by consumer spending, exports, and federal government spending. A decrease in housing investment was partially to blame for GDP underperforming the prior quarter’s growth.
Will the Fed Cut Rates Again this Week?It is widely expected that the Fed will cut interest rates by 25 basis points on Thursday. Annual growth for the all-items consumer price index slowed to 2.4% in September, the lowest in more than three years, and it was similar to inflation before the pandemic.
Lower interest rates can help keep consumer spending at a strong rate and allow businesses to invest more in hiring and equipment upgrades.
If the Fed does not lower interest rates this week, the committee will have another opportunity before the end of the year. Its next regularly scheduled meeting is on December 17-18.
Multifamily HighlightsOperational metrics barely budged from the prior week, which is a good sign during a seasonally slow period. That is especially true for metrics like occupancy rate and traffic which have been at their lowest levels in the past few years. In addition to the amount of supply being delivered, slower job growth has likely weighed on performance as well.
Rent growth did not experience as big of a decline in October this year compared to 2023. At the national level, effective rents declined 46 basis points in October this year compared to a 133 point drop last year. On an annual basis, rents are still down 0.2% from a year ago, but that metric is poised to turn positive.
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Top Metros for Job Growth
Last week, the Bureau of Labor Statistics (BLS) released its monthly report on metro-level job growth. It is one of the most important indicators of multifamily demand because new jobs tend to create new households, and a portion of them will move into apartments.
On a seasonally adjusted basis, New York and Los Angeles added 164,000 and 91,000 jobs in the last year, respectively. Dallas, Houston, and Miami were next on the list, adding between 56,000 and 79,000 jobs in the past 12 months.
Charleston’s annual job growth of 3.7% was the strongest relative change out of the 45 markets published by Radix. Wilmington and San Antonio each had annual job growth of 2.6%.
Based on the report, Minneapolis and Portland have lost approximately 5,500 and 8,000 jobs, respectively, but Radix data indicates demand for apartments has remained strong. Both have positive annual rent growth and occupancy rates above 94.4%. It will be worth watching whether the numbers are ultimately revised.
Job Creation Compared to New Supply
To put jobs data into context, real estate economists will often compare the number of jobs created in a market relative to the of new housing units being constructed.
As of the latest estimates, New York, Los Angeles, and Charleston have created approximately five times as many jobs in the last year compared to the number of new multifamily units delivered.
While each metro area has a different long-term average for the number due to a variety of factors, a five-to-one ratio is considered very favorable for operators to absorb the new supply delivered to the market.
Markets such as Phoenix, Atlanta, and Raleigh are only adding approximately two jobs compared to each new apartment unit delivered, suggesting that operations will be more challenging. Factoring in single-family construction in those markets further dilutes the demand.
As new supply slows, those ratios will improve if the labor market remains steady.
Final Jobs Report before U.S. Presidential Election
The national jobs report for October will be released by the BLS this Friday, November 1. It will be delivered just days before the presidential election, and it could have mixed signals on the strength of the labor market due to recent events.
For its “First Friday” report on the national labor market, the BLS surveys employers based on the pay period that includes the 12th of the month. It’s worth noting that hurricanes Helene and Milton made landfall on September 26 and October 10, respectively. Unemployment insurance claims spiked in states affected by the hurricanes during the first half of October.
As an example, North Carolina reported 11,655 initial unemployment insurance claims the week ending October 5, and another 9,290 initial claims for the week of the 12th. A year earlier it was closer to 3,600 claims per week. In just that one state, more than 13,000 people lost their jobs in a two week span compared to more normal period.
Additionally, roughly 33,000 machinists at Boeing have been on strike since September 14. Those are some of the factors that could lead to a more pessimistic report after the very strong reading of 254,000 jobs created the previous month.
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Retail Sales Stronger than Expected, Again
Consumer spending outpaced expectations in September, and August’s better-than-expected results were unrevised. Retail sales were up 0.4% from the prior month and 1.7% from a year ago. Discretionary spending at restaurants, drinking establishments, and clothing stores helped boost the number.
It is yet to be seen if strong sales will continue through the holiday season. While spending is up, consumer sentiment remains sluggish even though the Bureau of Labor Statistics recently reported strong wage growth and more moderate inflation.
Strong GDP Estimates for Q3 2024
The Atlanta Fed’s latest estimate for Q3 GDP growth is 3.4%. The organization’s model, GDPNow, had it as low as 2% in August, but recent economic reports gave it a boost during the last two months.
The Bureau of Economic Analysis will release its advance estimate of GDP on October 30.There is growing sentiment that continued strength in the economy could lead to a more moderate interest rate cut of 25 basis points by the end of the year.
Permitting for Multifamily Housing Yet to See an Uptick
For the 12 months ending September 2024, total housing permits were down 2.9% from the prior month and down 5.7% from a year ago on a seasonally adjusted basis. Permitting for multifamily units continued to be the main driver of the decline. The industry had 398,000 units permitted in the last year, down 17.4% on an annual basis.
The latest multifamily permitting level is down significantly from the construction boom period a couple of years ago when it eclipsed more than 700,000 units permitted within a 12-month period, but it is also down from the period immediately before the pandemic. From 2015-2019, the industry’s annual permitting level averaged 442,000 units.
Normal, or even muted, levels of supply are on the way the next couple of years which should help operational metrics rebalance after a period of significant challenges.
Multifamily Highlights
Traffic and occupancy continued to tick down in the latest week’s results. The trend can mostly be attributed to seasonality, but the rates themselves are weaker than in other comparable periods.
Headed into 2024, Radix forecasts indicated occupancy would average at lower rate than the prior year due to elevated supply and slowing job growth. That prediction has come to fruition, but results are expected to rebound in 2025 as supply slows significantly in many markets.
Effective rents were stable from the previous week. If occupancy improves in 2025, concessions should moderate. As of the latest week, roughly half of markets had lower effective rents compared to the prior year.
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Economists predict 1.5 million jobs to be added in the next 12 months
At the beginning of each quarter, The Wall Street Journal surveys more than 70 economists on a variety of topics. For the October 2024 results, the group predicted an average of 130,397 jobs to be added per month for the next year, or a total of more than 1.5 million jobs annually.
The overall average was very consistent with the surveys from the prior two quarters, but there were fewer outliers, particularly on the downside. In the April 2024 survey, two responses indicated more than a million jobs would be lost during the next 12 months. In this month’s survey, all respondents indicated positive growth for the next year, with the lowest at 240,000 jobs added annually.
The optimistic, but conservative, outlook for the job market is positive for the multifamily industry.
Chances of a recession are at the lowest since in more than two years
Based on the same survey, the probability of a recession during the next 12 months ticked down from 28% last quarter to 26% this quarter. It was the survey’s lowest average probability of a recession since January 2022.
The probability was as high as 63% in October 2022. While the U.S. did not go into a recession, a wave of high-profile layoffs occurred later than year and in early 2023, especially in the tech sector.
In last week’s report, we noted Goldman Sachs recently lowered its chance of a recession to 15%following the strong labor market report.
Interest rates poised to decline again by the end of the year
Finally, more than 80% of the survey’s respondents thought the Fed would cut interest rates by at least 50 basis points by the end of the year. The midpoint of the federal funds rate is 4.875%today. Economists predicted it to decline to approximately 4.4% by the end of 2024 and 3.3% by the end of next year.
Multifamily Highlights
The national occupancy rate declined to 93.59% last week. While occupancy normally declines in the fall season, it took until late November last year before occupancy slipped to that rate. Based on Radix forecast, U.S. occupancy is expected to be 94.2% a year from now due to sustained job growth and declining supply.
Annual effective rent growth remained at -0.5% at the national level. It is projected to turnpositive by early 2025 and end next year just above 3%. Roughly one-third of the 45 marketspublished by Radix already have rent growth near that range.
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Jobs Report Much Stronger Than Expectations
The U.S. economy added 254,000 jobs in September according to the Bureau of Labor Statistics(BLS), which was roughly 100,000 more jobs than expected. Additionally, the preliminary results for July and August were revised upward by a combined 72,000 jobs, suggesting the labor market remains strong.
Job growth is one of the most important factors to multifamily demand because it helps spur new household formation. Combined with declining supply levels in many locations, multifamily fundamentals are trending in the right direction for more balanced operational results in 2025.
While the numbers released last week are favorable, recent labor market reports have faced much criticism related to their accuracy due to repeated downward revisions in subsequent publications. That said, current multifamily rent growth and occupancy rates suggest supply and demand have found equilibrium in many markets.
Wages are Up and Unemployment is Down
The BLS also reported average annual wage growth in the U.S. increased to 4.0% in September. It had decelerated to 3.6% in July before increasing the past two months. Based on Radix data, the last time national rent growth exceeded wage growth was in September 2022.
The unemployment rate decreased slightly to 4.1%. The trend suggested many people impacted by layoffs have been able to find new work, but hiring remained very concentrated in just a handful of industries. Approximately 73% of new jobs created in September were in healthcare, social assistance, government, construction, restaurants, and bars. Job seekers in other industries likely feel like the labor market is weaker than headline reports.
Goldman Sachs Lowers the Probability of a Recession
According to a report by CNBC, Goldman Sachs has lowered the chance of a near-term recession to 15%. To put it into perspective, that number is considered the baseline probability for any “normal” period.
Last week’s strong labor market report was noted as one of the factors playing a role in the optimistic outlook. Other positive economic news during the last month included lower growth in inflation, better-than-expected consumer spending, and the Fed lowering interest rates.
Multifamily Highlights
Operational performance in the first week of October showed no material differences than prior weeks, outside of typical seasonal slowing. Traffic and occupancy rates remained down from last year, but the week-to-week changes were minor. Annual rent growth remained negative at -0.5% at the U.S. level.
Steady job growth should result in a typical fourth quarter for performance for multifamily, especially in markets where supply is slowing. If that happens, more markets will show positive rent growth and improved occupancy rates in 2025.
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This is a narration of our weekly Rent and Operating Trends Report.
Fed Chair Jerome Powell Gives Positive Outlook
Speaking to attendees at the National Association of Business Economics annual meeting, the Fed’s leader provided an optimistic view of current economic conditions. While acknowledging that the labor market has cooled from an unsustainable pace, Powell also noted a relatively low unemployment rate and a high labor force participation rate for prime-age workers.
He stated that the Fed does not need to see further cooling in the labor market, which is likely a good sign for future interest rate cuts. Overall, he described the economy as being in “solid shape” as we head into the fourth quarter.
Inflation Continues to Head in Right Direction
The personal consumption expenditures index (PCE), the Fed’s preferred measure of inflation, showed prices were up 2.2% in August. It was down from 2.5% in July and trending closer to the Fed’s target rate of 2.0%.
It was another favorable report released about the economy in line with a soft landing. In recent weeks, initial unemployment insurance claims have trended lower, consumer spending increased, and the latest GDP estimate was stronger than expected.
New Jobs Report on Friday
The Bureau of Labor Statistics will release its monthly U.S. jobs report on Friday. Consensus expectations are currently close to 150,000 jobs added for September, similar to August’s total. The unemployment rate is likely to have a slight uptick from the prior month.
Two of the main themes that have persisted in recent reports have been downward revisions to prior job growth estimates, as well as lack of employment growth in the private sector.
U.S. Multifamily Performance
Recent notable trends for rent growth and traffic continued in the latest Radix report. As of last week, effective rents were down 0.5% from the prior year, but the rate has incrementally improved from an operator’s perspective in the past several weeks. Houston became the latest major market to post positive annual rent growth, just as supply is poised to decline significantly in the market next year.
Traffic, the number of new leases signed, and the occupancy rate for the U.S. all ticked down due to seasonality. The latest week’s traffic count per property in the U.S. was the lowest since the initial onset of the pandemic. The average occupancy rate for the U.S. is still at 93.7%, but the lower traffic counts are especially concerning for markets or properties with high vacancy rates heading into the fall and winter seasons.
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This is a narration of our weekly Rent and Operating Trends Report.
The Fed Cuts Interest Rates
It happened much later in the year than many economists anticipated, but the federal funds ratewas finally lowered last week. At the beginning of the year, it was widely speculated that interest rates would be cut at least once by early summer, but it took until mid-September.
The 50-basis point decrease put the benchmark rate in the current range of 4.75% to 5.00%. The latest expectations by voting members show interest rates could be cut an additional 50 basis points by the end of this year, and another 100 basis points by the end of 2025.
It is believed interest rate cuts will help stabilize the job market which happens to be one of the biggest drivers of multifamily performance.
Layoffs Down from Midsummer
Unemployment insurance claims have gradually decelerated based on data from the Department of Labor. Last week’s report showed 219,000 initial claims for the week ending September 14. It was the lowest weekly total since May 18, and it was down from a recent high of 250,000 claimsin July.
Initial claims represent the first week a worker files for unemployment, and analysts reference it as a more up-to-date proxy for layoffs. The recent trends are a positive indicator for the labor market, and they do not suggest a surprise is in store for next week’s national jobs report from the BLS.
Other Economic Notes
According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage declined to 6.09% last week. This year’s peak rate was 7.22% in May.
The Commerce Department reported that retail sales increased 2.1% on an annual basis in August, outperforming economists’ expectations. The trend suggests consumers do not fear a recession on the near-term horizon.
U.S. Multifamily Performance
Traffic declined 6.3 tours per property at the U.S. level, the lowest since January 2022. While some markets are on par with last year’s pace, practically all operators we have talked to in recent months have experienced more moderate traffic this year. Despite the slower traffic in 2024, occupancy rates have been stable at just below 94% all year.
Annual rent growth remains negative at the national level, but it has improved incrementally to the current pace of -0.6%. More than half of U.S. markets are now registering positive year-over-year rent growth, many in a range of 2% to 4%.
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CPI at Lowest Growth Rate in More than Three Years
The consumer price index (CPI) grew by 2.5% on an annual basis in August 2024. It was down from 2.9% the prior month, and it was the metric’s lowest annual growth rate since February 2021. Prices for gasoline and used cars dropped the most from a year ago, both were down more than 10%.
The more moderate inflation numbers suggest consumers should have more purchasing power. According to BLS data, wages are growing faster than the price of goods and services. Real wage growth, which is the gap between the growth in earnings and consumer prices, registered 1.3% on an annual basis in August.
Delinquency Rates Rise for Credit Cards and Auto Loans
Despite the positive trend for real wage growth, many consumers are still struggling to keep up with monthly payments on bills. Credit card delinquency rates have increased from 4.1% at the end of 2021 to almost 9.1% as of Q2 2024. Auto loan delinquency increased from 5.0% to 8.0% during the same period.
The increase in interest rates is one of the reasons for the change. According to data from the Fed, credit card interest rates increased from approximately 15% in 2019 to 21.5% this year.
Interest Rates are Set to Decline
Investors and consumers are anticipating the Fed’s announcement on interest rates this week. Many investors are anticipating a 50-basis point reduction in the federal funds rate becauseinflation has eased and there are concerns the labor market has cooled more than expected.
According to data from Freddie Mac, the average mortgage rate for a 30-year fixed-rate loan has already dropped considerably prior to changes in the federal funds rate. As of last week, the 30-year mortgage rate averaged 6.2%, down from almost 7.2% in April. The last time it was that low was in February 2023.
Occupancy Rates Trending Up in Many Markets
The U.S. occupancy rate registered 93.8% last week, down 24 basis points from the same week last year. At a more granular level, many markets are showing year-over-year improvements in their occupancy rate.
As of the latest week, 18 markets had an occupancy rate above last year’s level, and three more had flat growth. Markets with positive annual occupancy rate changes averaged net effective rent growth of 1.9% during the past year. Markets with occupancy rates below the prior year’s levellowered rents by an average of 1.0%.
As supply levels subside, more markets should see an uptick in annual occupancy rate growth ifdemand holds.
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Another Moderate Jobs Report
According to last week’s report from the Bureau of Labor Statistics, the U.S. labor market added 142,000 jobs in August 2024. While that number is in a decent, sustainable range, the two priormonths’ totals were revised down by a combined 86,000 jobs.
It was another signal that the labor market has cooled more than previously reported. Still, the number of jobs created seems to be enough for many markets to stabilize multifamily rents and occupancy rates.
It is widely believed the latest labor market report further supports an imminent interest rate cut by the Fed.
Unemployment Rate Declines Slightly
The unemployment rate fell to 4.2% in August 2024. While it was a slight improvement from July, there were approximately 800,000 more people unemployed in August than a year ago.
While the overall unemployment rate increased from 3.8% a year ago, some types of jobs remain in high demand. Architecture and engineering occupations had an unemployment rate of just 1.7%, down from 2.6% the prior year. Jobs in the legal industry, as well as some jobs in healthcare, still registered unemployment rates below 2.0%.
Healthcare and Construction Industries Led Job Creation in August
Job gains continued to be concentrated in just a few industries based on last week’s report. Healthcare and social assistance, which has dominated job creation the last year-plus, added 44,000 jobs in August. Construction added 34,000 jobs, and most of them were either in heavy and civil engineering or nonresidential specialty trade contracting.
Employment in manufacturing declined 24,000 from the prior month, and other recent reports have indicated a decline in consumer demand for manufactured goods, a concerning sign for the economy.
Multifamily Results Stable Despite Cooling Job Market
While recent labor market reports have been less than spectacular, it does appear multifamily performance is stabilizing in many markets. As supply has started to slow in many parts of the U.S., there has been enough job creation for occupancy rates to maintain close to 94% and more markets are seeing positive year-over-year rent growth. Of course, there are still certain markets and submarkets that have a longer path to recovery.
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This is a narration of our weekly Rent and Operating Trends Report.
U.S. Economy Stronger than Initially ReportedGDP for the second quarter was revised upward last week by the U.S. Bureau of Economic Analysis. The initial report of 2.8% was already stronger than economists expected, and last week’s new estimate of 3.0% suggests the economy is still in good shape despite a cooling labor market.
The stronger growth was boosted by consumer spending, but there were downward revisions to other components such as business investment.
Latest Inflation Reading Supports Interest Rate CutThe personal consumptions expenditures price index (PCE) increased 2.5% from a year ago in July, or 2.6% excluding food and energy prices (core). Both rates were equal to June’s growth.
The core PCE growth is the Fed’s preferred measure of long-run inflation, and it is widely believed the reading further supports an interest rate cut later this month. It is believed lower interest rates would give a boost to the labor market, which would ultimately benefit the multifamily performance.
BLS Releases 10-Year Employment ProjectionsJob growth is forecasted to be more moderate the next decade based on a forecast released by the U.S. Bureau of Labor Statistics (BLS) last week. From 2023 to 2033, U.S. employment is projected to increase by 6.7 million jobs, or an average of 0.4% per year. For comparison, annual average job growth was 1.3% from 2013-2023 even with the disruption from the pandemic.
Job creation will be constrained due to weaker growth in the labor force as more people in the baby boomer generation retire. Job growth is one of the strongest demand drivers for multifamily, and the projected slowdown will almost certainly impact the number of renter households created.
Healthcare and social assistance is projected as the top industry for hiring. Given the demands ofan aging population, nurse practitioners and physician assistants will have some of the largest job growth. Computer tech occupations are expected to have the second highest growth, driven by jobs in AI, cyber security, and computer services.
Annual Rent Growth Turns Positive for More MarketsMultifamily performance was consistent with recent reports. Rent growth took another small step towards nationwide stabilization. Effective rents were down just 0.8% from the prior year, and several markets were on the cusp of positive rent growth territory. Traffic remained off pace from last year’s level, but the U.S. occupancy rate was just under 93.9% at the beginning of September.
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This is a narration of our weekly Rent and Operating Trends Report.
Fed Gives Strong Indication of Interest Rate Cut
In a speech last week, Federal Reserve Chair Jerome Powell said, “The time has come for policy to adjust.” The comment was in relation to an anticipated cut in the benchmark interest rate due to signs the labor market has cooled, and inflation measures have showed sustained downward pressure.
Higher interest rates have impacted the ability for consumers to purchase a home, which also has a ripple effect on the growth of other businesses, such as those like Home Depot. Additionally, the Fed reports the average interest rate for credit card accounts that assessed interest was 22.8% in May 2024 compared to 16.3% in May 2021.
The move to lower interest rates could also give a boost to multifamily transaction volumes, which have been significantly impacted by higher interest rates and lack of clarity on timing, direction, and magnitude of upcoming changes.
Radix Acquires redIQ’s Underwriting Platform
Just as multifamily transaction volume is likely to experience an upswing, Radix has acquired leading software for end-to-end underwriting, investment modeling, and forecasting returns.
Along with Radix’s operational benchmarks and research data, the combined products will create complete lifecycle insights from pre-investment to divestment.
Read the official press release here.
Consumer Confidence Jumps to Six-month High
According to The Conference Board, its index for consumer confidence registered the highest mark since February. While improved, consumers have mixed feelings about a variety of issues with so many factors in the economic and political headlines.
In aggregate, they were more upbeat on current business conditions, but simultaneously concerned about the labor market with the recent uptick in the unemployment rate. Note, overall consumer confidence remains below the levels for the three years before the pandemic.
Annual Rent Growth Turns Positive for More Markets
The U.S. multifamily industry continued to inch closer to broad-based stability in late-August. One year ago, only 10 of 45 markets had positive annual effective rent growth. Last week, 24 markets achieved that status. Even within most of the 21 markets that still show negative year-over-year growth, there are pockets of optimism.
In case you missed it, check out last week’s webinar and the associated slide deck that cover our outlook for multifamily performance. It also gives breakdowns of many U.S. markets and submarkets.
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This is a narration of our weekly Rent and Operating Trends Report.
Moderating Inflation Supports Potential Fed Rate Cut
The consumer price index (CPI), a key measure of inflation, slowed to its lowest annual growth since March 2021. July’s CPI growth of 2.9% was down from a peak of 9.1% in June 2022. Earlier in the month the Bureau of Labor Statistics reported wages grew 3.6% during the same period, and the combined numbers suggest pressure is easing on consumers. The lower CPI alsosupports optimism for an upcoming interest rate cut by the Fed.
Retail Sales Unexpectedly Increased in July
Sales at U.S. retailers grew by 1% from the prior month, which is important considering that consumer spending makes up approximately two-thirds of the U.S. economy. The increase was roughly three times higher than what economists had expected. The improvement was well received by analysts. According to Bloomberg, Goldman Sachs lowered its chance of a U.S. recession this year from 25% to 20% after the report of strong retail sales and lower jobless claims were announced late last week.
Multifamily Permitting Levels Decline, Again
For June 2024, the latest reported figures, there were 451,502 multifamily units permitted in the U.S. on a trailing 12-month basis. That was down slightly from the prior month’s total of close to 455,000 units, and it marked the 20th time in the last 23 months that it has declined. From a year ago, multifamily permitting is down 23% at the national level.
San Antonio’s 12-month total of 2,751 multifamily units permitted was down 80% from the prior year’s level. Oakland, West Palm Beach, and Portland each had multifamily permitting levels down more than 65%. Atlanta, Jacksonville, and Houston experienced declines of close to 50%.Most markets will see more moderate supply deliveries next year, which should help performance metrics return closer to long-term averages.
One market bucking the trend is San Diego. While other markets are seeing significant drops in activity, its multifamily permitting levels have increased significantly. There were 8,804 units permitted in the last 12 months, double the prior year’s level.
Multifamily Performance
While still negative, U.S. annual rent growth inched its way closer to flat with a -1.2% readingfor the latest week. Only a few markets, like Austin, still show a severe imbalance of supply and demand. Most others are displaying some form of stabilization for rents and occupancy rates, at least for certain submarkets or quality of assets.
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This is a narration of our weekly Rent and Operating Trends Report.\
Mortgage Rates Decline
According to last week’s data from Freddie Mac, the average rate for a 30-year mortgage hit its lowest level in more than a year. It dipped to 6.47% as of August 8, down from a peak of 7.79% in October 2023. Even with the decline, affordability remains a major challenge in the single-family home industry. It has been almost two years since the average 30-year mortgage rate was below 6.0%.
Key Economic Data This Week
This will be a busy week for economics readings, and the following reports are highly anticipated after the unimpressive jobs report from a couple weeks ago.
The producer and consumer price indexes for July will be released by the Bureau of Labor Statistics. They are key indicators related to inflation and most economists are hopeful they will trend in a direction that gives the Fed confidence to lower the benchmark interest rate at some point soon. The Commerce Department will report on the latest trends for retail sales which will shed light on consumer spending. Also, the University of Michigan’s preliminary report on August’s Consumer Sentiment Index will give us a view on how people feel about all the recent headlines in the economic and political worlds.
Unemployment insurance claims, metro-level job growth, and the number of buildings permitted for construction are among other metrics being released this week.
EQR Purchases 11 Assets from Blackstone
Another large apartment acquisition was announced last week. Equity Residential (EQR) stated that it has agreed to purchase 11 assets from Blackstone for close to $1 billion. The assets are in the markets of Atlanta, Dallas-Fort Worth, and Denver. On average, the properties are eight years old.
Multifamily Performance
Apartment performance remained steady through mid-August. Rents are still below last year’s level in many MSAs, but the most turbulent times are likely behind a lot of markets at this point. The national occupancy rate has held close to 93.9% the entire year, and the U.S. is on track to absorb more than half a million units in 2024. As long as the economy holds, many areas are poised for growth rates closer to historical norms in 2025.
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This is a narration of our weekly Rent and Operating Trends Report.
A softer-than-expected U.S. jobs report last Friday sent shockwaves through the investment world at the beginning of this week. At time of publication, all three major U.S. stock indexes were down more than 2.5% as the selloffs that started in Japan spread to other parts of the globe.
The movements followed one of the weakest jobs reports in the past few years, coupled with the Fed’s decision to leave interest rates unchanged during last week’s FOMC meeting. There is growing speculation that the Fed could make an off-cycle rate cut since the next meeting is not scheduled until September 17-18, but other executives and analysts suggest patience is needed.
In terms of the latest jobs report, the Bureau of Labor Statistics (BLS) reported the U.S. added 114,000 jobs in the month of July. It was the second lowest monthly total since the end of 2020, and job gains for the previous two months were revised downward by a combined 29,000 jobs. Job growth in the private sector remained very weak.
The unemployment rate increased to 4.3%, and wage growth slipped to 3.6%. Both of those numbers are still solid by historical norms, but the concern is more about the direction of the trend, especially for unemployment.
Many economists have noted that Hurricane Beryl likely influenced the latest jobs report by a degree, but the BLS reported it had no material impact on the nation’s overall results. Individual MSAs in the path of the hurricane, such as Houston, could show a dip in job growth when the metro-level reports are released later this month.
Multifamily fundamentals remained steady from the prior week, with some metrics slightly decelerating due to seasonality. Some of the largest tech markets are highlighted in this report for their improved apartment performance. San Francisco, San Jose, and Seattle were impacted significantly by layoffs in early 2023, which weakened demand for housing. Their metrics appear to be normalizing, which should speak to their underlying supply and demand fundamentals. Of course, tech stocks have taken some of the hardest hits in today’s developments.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy grew by 2.8% in the second quarter according to the initial estimate of GDP released last week. Consumer spending drove the strong quarterly growth, and the overall GDP increase was double the rate of growth in Q1. Despite elevated interest rates the economy continues to move forward at a strong clip. Speaking of interest rates, the June Personal Consumption Expenditures Core Index slowed from 3.7% to 2.9% on an annualized basis. As the Fed’s preferred measure of inflation, the slowing PCE should provide more fodder for the Fed to cut rates in the coming months. The Fed meets this week, and while I doubt rates will be cut at this meeting, they will likely use the opportunity to lay the groundwork for a September cut.
Multifamily fundamentals were mostly flat to negative last week at the national level. One metric showing modest improvement however is concessions. This is a welcome sight for operators who have been mired by high concessions for the past two years. As the end of the current supply wave progresses, concession activity will likely normalize to its long-term average. Certain sunbelt markets will maintain high concessions through the rest of this year and into next, but in time, concessions in those markets will also level out. Net effective rent also posted a modest gain last week.
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This is a narration of our weekly Rent and Operating Trends Report.
The mid-year employment numbers by metropolitan area were released last week. Job creation is one of the most impactful demand variables for multifamily because it spurs the formation of new households, helping to boost occupancy rates and absorb supply delivered to the market.
While the U.S. headline numbers have been solid, year-to-date job growth has varied significantly by market. In fact, some markets have lost jobs this year based on initial estimates. According to the U.S. Bureau of Labor Statistics, Denver, Minneapolis, San Francisco, Portland, and Cincinnati had fewer jobs at the midpoint of 2024 than the beginning of the year.
Out of that group, Denver’s reported loss of 5,400 jobs during the last six months is the hardest to rationalize since rent levels and occupancy rates have increased during the same period based on Radix data. That result would be hard to accomplish if demand was truly that weak. While San Francisco and Oakland lost 1,600 jobs on a year-to-date basis, that is significantly better than the nearly 14,000 jobs lost in the area during the first half of 2023 when tech layoffs were prominent.
Staying in California, Los Angeles showed one of the biggest improvements, adding almost 39,000 jobs during the last six months. For comparison, Los Angeles lost 8,000 jobs during the first half of 2023. New York led the country with 77,000 jobs createdyear-to-date, increasing its employment base by 0.8%. Washington, DC, Houston, Miami, and Philadelphia each added more than 30,000 jobs with approximately 1.0% growth. On a relative basis, Charleston and Raleigh had the strongest job growth rates, each up more than 2.0%.
Multifamily fundamentals were mostly steady last week with slight declines in some metrics. The industry is nearing the end of prime leasing season, and performance related to traffic, leases signed, occupancy, and rent should start to decelerate in the weeks and months ahead.
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Jay and Chris are back with another episode of the Radix Review: Multifamily Trends Explained.
Jay and Chris return for another episode of the Radix Review. Chris kicks things off, breaking down last week's rent and operating trends, as the key metrics began to soften nationwide. Traffic increased in only 3 markets last week as the prime leasing season has officially wrapped up. Most metrics should plateau for the next few months, so if we see continued weakness that could be a sign for a challenging second half of the year.
Jay takes a deep dive into the four main Texas markets, with their strong demand, but heavy construction pipelines leading to mixed results. Houston has emerged as the strongest market in Texas for the first time in a number of years. Houston has been countercyclical at times in its history, and the current balance of supply and demand has it well positioned.
The guys share their thoughts on the first interest rate cut, after a weaker than expected CPI report combined with a softening job market has economists chomping at the big for lower rates.
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Explore our webpage for more insights and resources: Multifamily Data Innovation at Radix: Property Management Solutions
This is a narration of our weekly Rent and Operating Trends Report.
Consumer inflation softened in June, drawing more calls for monetary easing from economists and market analysts. The Consumer Price Index fell 10 basis points in June compared to May, marking the first monthly decline in prices since early 2020. The annual inflation rate fell to 3.0%. On the heels of a weaker than expected employment report, the drop in prices has caught the eye of policy makers. While Fed Chair Jerome Powell did not say when rates would be cut, he indicated that a rate reduction is on the horizon. The Fed will meet at the end of this month and then again in September. I expect the Fed will wait until September for its first rate cut of this cycle.
Multifamily fundamentals declined across the board last week. Traffic, leasing, occupancy, net effective rent and revenue per available unit all declined on a week-over-week basis. With the spring leasing season behind us, most operating metrics will flatten for the next few weeks. However, if we continue to see growing deterioration in key indicators it may portend a weaker than expected second half of the year.
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Jay and Chris are back with another episode of the Radix Review: Multifamily Trends Explained.
As Q3 begins, Chris dives into the recent multifamily trends as key operating metrics have begun to plateau. There are still a few markets outperforming, and Huntsville, AL is awarded the market of the month of June. Strong occupancy and rent growth, combined with the highest leasing activity in the nation has helped Huntsville recover quickly from an oversupply issue.
Jay then breaks down the June employment report. Headline job formation was strong, coming in above 200,000 but unemployment is creeping upward and job gains remain concentrated in just a few sectors.
Tune in to hear what Jay and Chris think will unfold in the coming months if the employment market continues to soften.
Explore our webpage for more insights and resources: Multifamily Data Innovation at Radix: Property Management Solutions
This is a narration of our weekly Rent and Operating Trends Report.
The employment market has long been the backbone of the U.S. economy, as strong job gainscoming out of the pandemic fueled significant macro growth. The national unemployment rate fell to the low three percent range, and some metro areas saw unemployment in the two percent range. While we are still adding jobs at a strong clip, unemployment has increased in each of the past three months. At this time last year, the unemployment rate was 3.5%. It is now 4.1%, and while that is still below the rate of full employment by historical standards, it shows that some cracks are beginning to emerge in the job market. Since last Friday’s employment report, severaleconomists have been calling for rate cuts, and the potential for a July rate cut is back on the table. I don’t think the Fed will lower interest rates this month, however, they could use the meeting to clearly lay the groundwork for a rate cut in September.
As anticipated, the multifamily industry was mostly flat last week. July is typically the beginning of the stable period in our sector, and most key metrics will remain flat for the next month or two. Fundamentals will likely decline beginning in the late third and early fourth quarters. Growth may continue in certain markets where demand outpaces supply, and oversupplied markets may see further softening, yet nationwide the apartment industry will be mostly flat.
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Chris and Jay are back to break down the first half of 2024 in multifamily. West coast markets have had a strong start to the year with metros including Reno, Riverside, San Diego, Portland and Seattle cracking the top 5 for many apartment metrics. Detroit and Minneapolis have also been doing well as the midwestern resurgence continues. Jay breaks down the recently released metropolitan level jobs report, with major Gateway markets adding the most jobs on an absolute basis, while smaller markets including Charleston and Boise lead the way from a percentage gain perspective. The guys wrap up this week's show sharing their plans for the fourth of July and looking back on fond memories of past Independence Days. Happy Fourth of July to all our listeners!
This is a narration of our weekly Rent and Operating Trends Report.
The economy has stayed mostly unchanged through the first half of 2024, as employment outperformed, and inflation and interest rates have remained elevated. The second half of the year will likely be characterized by a series of “wait and see” situations. When will the Fed cut rates? How many cuts will there be? Will the job market remain hot? What will be the economic impact of the upcoming election? Without any major dark clouds on the horizon, but also no major catalysts for growth, I suspect the second half of the year to be fairly similar to what we’ve experienced in the economy thus far this year.
The multifamily industry is beginning its mid-summer plateau as the leasing season is mostly behind us. Occupancy reached 94% nationwide a few weeks ago, but it was short lived, and with last week’s minor decline, the national occupancy rate once again has a 93 handle. Leading indicators have been flat for the past few weeks and will likely stay that way through the summer. Net effective rents continued to grow last week, but rent is a lagging indicator. NER may continue to increase for a few more weeks, and then flatline with the other key performance metrics.
For more in-depth analysis on the first half of 2024, be sure to look for our 2024 Mid-year review and Second Half Outlook, which will be published in the next few days.
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Chris and Jay are back with this week's Radix Review: Multifamily Trends Explained. Jay kicks things off recapping the NAA Apartmentalize conference last week. He shares his insights from several client meetings, the tradeshow floor and even a few cheesesteak adventures. Chris breaks down the recent home sale and home price data from the National Association of Realtors.
The guys talk about the nuances between the for sale and rental housing market and the need for more housing supply despite the generational new supply levels currently impacting multifamily. Jay shares an update to Radix's product offering as the company will soon make their web scraped data available to clients. Finally Chris wraps up the episode introducing some questions and thoughts on the state of the power grids in the U.S. and how future housing growth will be shaped by infrastructure. Check out this week's show and subscribe to get access to all future episodes when they drop!
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June 27th 2024
This is a narration of our weekly Rent and Operating Trends Report.
Home prices rose to an all-time high in May according to data released by the National Association of Realtors last week. The median home price in the U.S. is $419,300, up more than 55% from its pre-pandemic level. Not only are prices at all time highs, but mortgage rates that have remained around 7% have made homebuying exceedingly difficult for many Americans. As such, existing home sales fell for the third consecutive month. Housing affordability and the undersupply of housing is becoming a growing issue as the election nears. Gen Z voters have voiced that housing affordability is the issue they care most about in the upcoming election, and it will be widely discussed on the campaign trail. Despite the boom in multifamily development, we remain in a housing shortage nationwide. As demand remains elevated, new apartment units will be absorbed, as the debate over housing affordability and development will continue to intensify.
The multifamily sector has seen firsthand how supply and demand impact pricing in housing. As supply has increased, rents and occupancy rates have fallen while concessions have increased quickly. The consumer has had the upper hand in many markets, especially in the sunbelt over the past 2 years. We can see the demand for housing very clearly, we just need to counter the demand with more housing supply. All types of housing will be needed to solve the affordability issue. Single family for sale, single family rentals and apartments will all contribute to easing the affordability challenges, and the onus is on local governments and communities to accept, approve and promote development of new housing.
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Jay and Chris are back this week with a special Radix Review podcast. Jay is live in Philadelphia for the NAA Apartmentalize conference. He breaks down what he has seen and heard thus far, and shares what Radix is focusing on for the week ahead. Jay also details the conference schedule and a few key things he's looking forward to in Philly. Jay and Chris share a brief update on overall apartment performance, as the national occupancy rate reached 94% last week.
For anyone attending Apartmentalize, we would love to see you at our Booth #2857. If you'd like to schedule a meeting to discuss your markets with Jay, feel free to reach out to marketing@radix.com or jay.denton@radix.com. Finallly, Blerim Zeqiri our CEO will be on a panel focusing on the importance of real time data in the apartment industry on Friday morning. Check it out!
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June 19th 2024
This is a narration of our weekly Rent and Operating Trends Report.
Given the potential for a significant change in economists’ expectations heading into last week’s releases, the domestic economy has been relatively steady over the past several days. The CPI was released last Wednesday showing a modest decline in inflation. The Fed announced later that day that they expect to cut rates once this year, although that is once again subject to change if inflation or the job market changes drastically. However, the market is taking the Fed’s commentary as a positive. Treasury yields are down about 20 basis points since last Monday, and the equity markets have performed well, with the S&P 500 gaining 2.4% in the past week. While some were expecting significant volatility in the economy, last week’s numbers and commentary were mostly stabilizing.
Multifamily continues its steady journey, but last week marked a significant milestone, as the national occupancy rate returned to 94%. While this threshold by no means marks the immediate return to growth for all multifamily markets, it meaningfully represents the stable growth in housing demand. Leading indicators were once again flat last week, and rent growth continued its slow march upward, as the national average net effective rent increased another 10 basis points.
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Jay and Chris are back this week talking mostly about the economic factors that drive multifamily performance and transaction activity. Chris starts things off with a high level overview of recent multifamily trends before Jay dives deep into last week's jobs report. The May numbers were stellar again, which provides continued demand and support for multifamily. Chris then breaks down the recent CPI report as well as the recent Fed meeting and Jerome Powell's commentary.
Interest rates stayed flat again, but Powell shed light on the expectation for one rate cut this year, and potentially four rate cuts in both 2025 and 2026. Since summer is in full swing and we were talking jobs, the guys wrap up this week's podcast talking about their most memorable summer jobs as kids. Check out this week's podcast and subscribe to get our weekly podcast on apple and spotify.
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June 6th 2024
This is a narration of our weekly Rent and Operating Trends Report.
It will be a big week for inflation and monetary policy, as the May CPI report comes out on Wednesday. Later that day, the Fed will conclude its June policy meeting with Chair Powell giving a press conference to discuss the current state of the economy and interest rates. There is very little chance of an interest rate cut this week, but Powell’s commentary combined with the Fed’s dot plot, which shows how each voting member feels on interest rates, inflation and other key metrics, should shine light on when we may see the first cut. Market sentiment will be reflected in the movement of treasury yields later in the week. Strong inflation will likely weaken the chances of 2024 rate cuts, and send treasury yields upward.
Multifamily fundamentals were mixed last week as the leading indicators were flat or declined slightly, while rent and occupancy increased modestly. Traffic and leasing have likely peaked for the year, and I’ll be focused on how far these metrics drop over the next six months as a measure of continued demand for multifamily. Rent and occupancy will rise for the next few months and then begin their decline for the remainder of the year.
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Jay and Chris are back to cover the recently released May data across the multifamily sector. They launch a new segment called the Market of the Month, and the first market to receive the honor is Wilmington, NC. Wilmington had a great May, adding nearly 60 basis points of occupancy and seeing rent growth of 1.5%.
Each month Chris and Jay will break down the markets and share their views on the best performing market. They also dive into some economic indicators showing signs of softening. GDP, manufacturing, job growth and the ten-year treasury are all showing early warning signs as we move into the summer. Finally they preview the upcoming NBA finals, not from a basketball perspective, but in terms of the multifamily markets in Boston and Dallas. Tune in to hear who they think will in on the court as well as in the multifamily market moving forward.
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May 30th 2024
This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy is starting to flash warning signs of a slowdown that many predicted would come sooner. Q2 GDP was revised downward last week to an annualized pace of 1.3%, 30 basis points below the first estimate in April and more than 200 basis points below the pace of growth from Q1. Key manufacturing indicators are also pointing to a slowdown in the U.S. Later this week we will get the May employment report which should give us a good indication of whether the weak report in April was an anomaly, or the beginning of a larger trend.
Multifamily indicators were mixed last week, and mostly flat for the month of May. Traffic and leasing have remained unchanged for the past few weeks, and I believe we have seen the peak for both leading indicators this year at the national level. Rent growth and occupancy continue to improve as they dig out from the now two-year slumps.
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Jay and Chris are back with another episode of the Radix Review: Multifamily Trends Explained
This week's episode of the Radix Review: Multifamily Trends explained focuses on housing demand. Chris and Jay kick off the pod breaking down the recent home sale data from April. High mortgage rates and rising home prices are pushing home sales lower as more would be buyers are priced out of the market. They then dive into the Radix data, going deep on traffic. Chris looks at the best performing markets over the past year as well as during the current leasing season. Jay shares his thoughts on how operators can use traffic to craft their renewal and occupancy strategy. They conclude by discussing the upcoming Radix Market Spotlight webinar series. The first webinar will be May 30th, focusing on Phoenix, with weekly webinars coming throughout the summer. Register here.
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May 30th 2024
This is a narration of our weekly Rent and Operating Trends Report.
New home sales reached another low in April, as persistently high mortgage rates cut into for sale housing demand in a meaningful way. However, driven heavily by immigration, continued household formation and aging Millennials, overall housing demand remains strong. Thus, rental demand is elevated, helping to buffer the apartment industry as we begin to approach the end of the current development cycle. While there are still a historically high number of units under construction, with each passing month and each new community delivered, the new supply pressure is starting to ease.
Most apartment metrics were flat last week with the exception of occupancy and units available to rent. Renewals continue to be the highest priority for property operators, as traffic and leasing have shown steady indication that they will trail recent year highs. Rents and occupancy rates will likely oscillate from now until the end of the year. Our recent forecasts released last week point toward year-end national occupancy at 93.9% and annual rent growth of -0.9%.
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In this week's episode of the Radix Review: Multifamily Trends Explained, Jay shares some local insights on the Austin market following a recent trip to the Texas Capital.
Heavy new supply and some economic crosswinds leave Austin in a precarious place as multifamily fundamentals have struggled of late. Chris breaks down the recent state employment data from the BLS. Texas and Florida led the way in April adding more than 40,000 jobs last month in each state. They also discuss New York and California, two states who appear to be heading in opposite directions from an employment perspective.
Finally, Jay and Chris cover the recent updates to the Radix rent, occupancy and revenue forecasts for the remainder of 2024. Smaller western markets that are outperforming saw their forecasts revised upward, while downward revisions hit some oversupplied markets in the southeast.
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May 23rd 2024
This is a narration of our weekly Rent and Operating Trends Report.
The Consumer Price Index met economists’ expectations last week and inflation cooled modestly. Prices grew at an annualized rate of 3.4% in the 12 months ending in April, marking the first time since last December that annual inflation dropped. With that said, I do not expect the Fed to alter its path of monetary policy and we will likely see the first rate cut in Q3.
Multifamily fundamentals had another good week last week. The leading indicators, traffic and leasing, were flat for the second week in a row, but occupancy and rent ticked upward as the key performance metrics continue to grow throughout Q2. If we have reached the high-water market for traffic and leasing for the year, it would mark a significant slowdown from last year. Traffic peaked at 9.2 tours per property nationwide at the end of May last year. We are currently a full tour per property behind last year’s pace. Leasing topped out at 3.1 new leases per property last June, roughly a half lease per property above last week’s average.
We will be launching our latest round of rent, occupancy, and revenue per available unit forecasts later this week. If you’re interested in our national or metro level forecasts, please reach out and we would be happy to share them!
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Jay and Chris are back with another episode of the Radix Review: Multifamily Trends Explained.
This week they share some good news on the rent and occupancy front. Occupancy has been increasing steadily throughout 2024 as it nears 94% once again. Rents picked up 20 basis points last week and continue to show signs of growth in the spring. Diving deeper into the rent data, larger units have outperformed smaller units as residents have stressed the importance of more space in their apartments.
We also discuss the recent unemployment insurance claims as well as our projections for inflation and upcoming monetary policy decisions.
Tune in as our economists cover the topics you need to know this week!
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May 14th 2024
This is a narration of our weekly Rent and Operating Trends Report.
New jobless claims rose to their highest level since August last week, as more than 230,000 people filed a new unemployment claim. While the increase in unemployment claims, paired with the slowdown in job creation in April may appear alarming, the employment market remains in a solid position. The Consumer Price Index comes out on Wednesday and will provide further information on the state of inflation in the U.S. economy.
Rent and occupancy both posted strong gains last week, as the key performance metrics show signs of life at the midway point of May. National occupancy added 3 basis points and is only down 26 basis points from a year ago. Net effective rents increased 20 basis points last week, and the annual decline improved to 150 basis points. The leading indicators, including traffic and leasing were mostly flat last week.
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Chris and Jay are back to talk about the recent earnings reports from the publicly traded REITs. We discuss key takeaways on the revenue and expense side and dive into some of the regions that are performing well and some that are struggling.
We then cover a few midwestern and southeastern markets that we have recently seen and comment on the current state of supply and its impact on property performance.
The episode wraps up with a discussion on Austin, a market that has been widely covered from an economic and multifamily perspective. We will both be in Austin next week, and we share what we are looking forward to seeing in the Texas capital.
Jay and Chris are back talking about some of their takeaways from recent travel to high supply markets as well as some experience in the markets with the best rental performance in the nation. We break down the highlights from the recent REIT earnings releases. Revenue growth remains positive, aided by steady renewal rent growth but expenses at most REITs are outpacing revenue growth. Finally we wrap up with a conversation on the Austin market and a quick food minute on the BBQ scene in the Texas Capital.
This is a narration of our weekly Rent and Operating Trends Report.
The employment market softened in April as 175,000 new jobs were added last month. This marks a significant slowdown to the torrid pace set during the prior three months of 2024, but does not warrant huge concern for the state of the economy, at least not yet. The U.S. job market has still added nearly one million jobs so far this year, and even though the decline from March looks sizable, 175,000 new jobs is a healthy gain by historical standards. Unemployment ticked up modestly and wage growth came down, but the overall state of the job market remains very stable. While the Fed’s dual mandate includes optimizing the job market, the slowdown in April alone will not be enough to change the course of monetary policy.
Apartment fundamentals saw steady growth across the board last week, except for net effective rent. Traffic and leasing inched upwards and occupancy continues to rally from its recent bottom in January. The number of units available to rent continues to decline and has dropped nearly 30% in the past year.
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In the first episode of a new podcast series from Radix Research, co-hosts Chris Nebenzahl and Jay Denton cover the key trends impacting multifamily in April. They also take a deep dive into the recently released April jobs report and discuss the Fed meeting which wrapped up last week. To close out the pod they leave things on a light note and share their predictions for the Kentucky Derby!
Check out the Radix Research Roundup, our newest weekly podcast series!
This is a narration of our weekly Rent and Operating Trends Report.
When the Fed will cut interest rates is anyone’s best guess as conflicting market indicators continue to muddy the waters of monetary policy decision making. The likelihood of a rate cut in Q2 was dealt another blow last week when the Personal Consumption Expenditures Index came in higher than economists’ expectations. As the preferred inflation gauge of the Fed, the elevated PCE data will likely delay any easing discussion when the Fed next meets this week. However, the post-meeting press conference should give us some insight into how the Fed currently views the interest rate market. With oil firmly rooted above $80 per barrel and consumer spending continuing, I do not expect inflation to fall drastically in the summer months.
Most multifamily indicators were flat last week at the national level as we near the end of April. I anticipate we will see continued modest improvement in overall fundamental performance, yet the pace of growth will likely remain muted. New supply continues to dominate the focus for multifamily operators nationwide, but local demand trends are having a major impact on property fundamentals at the market level. Two peer markets that have been widely discussed from a supply and demand perspective are Austin and Nashville. Recent news of Oracle’s headquarter relocation from Austin to Nashville, along with mass layoffs at the Tesla plant outside of Austin, may drive demand in two separate directions for the popular secondary markets. Job growth and the diversity of the employment market will continue to be key factors in determining the strength of a metro’s multifamily market.
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This is a narration of our weekly Rent and Operating Trends Report.
As the U.S. economy continues to progress steadily, the public eye will likely shift toward the upcoming election and geopolitical risk that has emerged in recent months and years. Congress just passed an additional aid bill for Ukraine and has been involved indirectly in the growing conflict in the middle east. Both wars will be influential on the U.S. economy, and continued escalation could likely increase the U.S.’ involvement. While headlines have been muted related to the presidential election so far this year, that is likely to change as we near the halfway point in 2024. The election is about 6 months away, and the political fervor will certainly heat up. However, the economy stands on very solid footing despite tight monetary policy.
Key multifamily indicators were mostly flat last week. With demand outperforming expectations, some markets are seeing healthy fundamental growth thus far this year. Markets that are oversaturated with new supply are also doing better than expected, even if growth has yet to emerge. Multifamily permitting has fallen drastically in most markets since 2022, but with recent demand elevated, I would expect permits and starts to pick up, even though developers are still fighting an uphill battle due to elevated financing costs.
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This is a narration of our weekly Rent and Operating Trends Report.
As the U.S. economy continues to defy expectations both from a strong employment market and a persistent inflation perspective, economists are asking what is driving these trends. Many point to a recent report from the Congressional Budget Office indicating that more than 3 million immigrants entered the U.S. last year, well above recent years and projections. The labor force needs workers, as the data has shown, with more and more jobs being created, while the unemployment rate has stayed steady and even increased slightly. However, with more jobs being created and wages increasing modestly, more workers are able and comfortable consuming. This is leading to elevated inflation figures and likely a delay in any interest rate cuts from the Federal Reserve.
Apartment fundamentals are steadily improving, although the divergence between the leading indicators; traffic and leasing, and the secondary indicators; occupancy and rent, is continuing to widen. Leading indicators have been increasing slowly this year, while occupancy has been growing at a much steadier pace. The number of units available to rent is also improving and is the only key indicator tracked by Radix that is in better shape than it was a year ago. This data continues to point toward the notion that residents are renewing leases at a higher rate, shopping around for fewer apartments and staying put, after several years of elevated movement.
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This is a narration of our weekly Rent and Operating Trends Report.
The macro economy continues to defy economist expectations and remains in very strong condition as we start the second quarter. March job growth exceeded 300,000, making it the strongest month of the year and bringing year-to-date job growth above 800,000. For context, at the beginning of the year, the Wall Street Journal polled 64 economists to get their expectations for job growth this year. 26 of the 64 predicted fewer than 800,000 jobs would be created in the entire year, let alone the first quarter. If the employment market remains on its current pace, multifamily demand should outperform as well, easing the pressure on several apartment operators. Yet the strong economy may also cause the Fed to delay or reduce the number of interest rate cuts this year. A number of Fed governors have spoken recently and shared their intent to keep rates where they are, especially as inflation remains slightly elevated in the 3% range and employment continues to be extremely strong. While many prognosticators expected the first rate cut in May or June, it will now likely be pushed into Q3 or later.
Leading multifamily indicators were flat last week, while rent and occupancy both increased. Ideally for operators, traffic and leasing activity will begin to rise again, as both metrics lag their levels from last year. With asking rents falling in several markets, operators have shifted their focus to retention and renewing leases for existing tenants. As such, occupancy has grown slowly but steadily, while traffic has lagged its normal seasonal levels.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy ended the first quarter on strong footing with most economic indicators reporting growth. The final estimate of Q4 GDP showed the economy expanded at a 3.4% annualized rate, bringing the 2023 full year growth to 3.1%. Despite restrictive monetary policy, economic growth continues to outperform. Job growth remains strong, and inflation continues to moderate. The equity markets are doing well, as the S&P 500 is up more than 10% so far this year. As American consumers and businesses continue to adapt to life in a new and higher interest rate paradigm, the economy has not yet shown signs of deteriorating.
Multifamily fundamentals continue to increase as we move into the second quarter, however, the pace of growth is not fast enough to keep up with last year’s results. All key indicators remain negative on a year-over-year basis at the national level. Furthermore, the divergence between markets with strong performance and markets searching for a bottom continues to widen as the effect of new supply weighs heavily on key markets in the sunbelt.
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This is a narration of our weekly Rent and Operating Trends Report.
As expected, the Federal Reserve kept interest rates steady last week, but many Fed officials still predict multiple rate cuts this year. Investors responded favorably and the stock market reached new highs after the announcement. In addition to lowering the mortgage rate for single-family home purchases, lower interest rates would ease pressure from monthly credit card payments for consumers and businesses. According to the Fed, the average interest rate on a commercial bank credit card was 21.5% in the fourth quarter of 2023, the highest in at least 30 years and up from 14.9% at the end of 2019. Many businesses also leverage lines of credit, and in aggregate, the higher rates could have an impact on job growth.
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This is a narration of our weekly Rent and Operating Trends Report.
Domestic migration and population growth are key drivers of multifamily demand, and the Census Bureau released its 2023 county level population statistics last week. These data provide insight into which local areas are experiencing the fastest growth and which areas are struggling with outmigration. Overall, many of the same trends we have experienced in the past few years have continued, with sunbelt counties in Florida, Texas, Arizona, and the Carolinas taking the lion’s share of growth. Counties from large gateway markets in Los Angeles, Chicago and New York led the way for outmigration. Yet the pace of growth and the pace of decline slowed in 2023 from previous years. Given the severity of the new supply pipeline in the south, slowing demand growth will likely extend the lease up timelines and recovery for many of these markets. Conversely, slower population declines in gateway markets, set against a landscape of relatively limited supply may lead to continued outperformance in places like Chicago. We will be covering the domestic migration and population growth data in further detail in future reports and social media posts.
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This is a narration of our weekly Rent and Operating Trends Report.
Despite a significant downward revision to the January numbers, the February jobs report provided further evidence of an extremely robust labor market. 275,000 jobs were added last month, and more than half a million jobs have been added so far this year. The unemployment rate ticked up modestly but remains low by historical standards. Wage gains increased 0.1% last month and 4.3% from February of 2023, providing further evidence that inflation is slowing. Fed chair Jerome Powell gave a very measured statement last week in his testimony to Congress, saying that he expects rates to come down in 2024 but is not ready to say when the first rate cut will be.
Apartment fundamentals were up across the board, as the multifamily market continues its growth to start the year. All key metrics increased last week for the first time in months. Traffic, occupancy, and rent remain below their levels from this time last year, but the recent growth has provided optimism for a strong year ahead.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy remains on firm and stable footing through the early part of 2024. GDP was revised slightly downward last week, but economic growth for the fourth quarter remains well above the long-term average. A few Fed governors will speak this week, highlighted by Chair Powell’s Congressional testimony on Thursday. We will see the February jobs report on Friday, which will provide further indication on the strength of the labor market after a banner month in January.
Multifamily fundamentals posted another strong week as we move into March. As the weather improves across much of the nation, March is typically the first month of the prime leasing season, which tends to last for three to four months. Apartment performance is growing steadily as we head into leasing season, which is a good sign for most markets. I expect to see steady growth in markets that do not face extreme supply challenges. In those markets battling new supply, I will look for stabilization as a sign that these high demand markets can weather the current storm and emerge strong next year when new deliveries start to slow.
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This is a narration of our weekly Rent and Operating Trends Report.
The 2024 presidential election is about 8 months away and political and fiscal issues are beginning to take center stage for the American consumer. The economy remains strong with steady GDP growth, a tight labor market and generally softening inflation, but issues including a government shutdown, international aid and foreign policy are becoming focal points. With a highly polarized populous I would not expect any radical change regardless of the outcome of the election, but there will certainly be significant discourse surrounding both candidates and the economy in the months to come.
Multifamily fundamentals are largely apolitical as well. While there is some discussion at the local level surrounding rent controls and other regulations in our industry, I would be surprised to see any sweeping national changes that would prohibit the free market from governing. Supply and demand are still driving apartment performance, with the current supply wave continuing to impact fundamentals in most markets.
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This is a narration of our weekly Rent and Operating Trends Report.
In the wake of a higher-than-expected inflation report, the theme from many Fed Governors last week was patience in determining when the first interest rate hike would be. The Consumer Price Index came in higher than many economists expected for January, which led to an equity market sell off and an increase in treasury yields. Both are indicators that the market expects the Fed to wait longer than previously anticipated before dropping interest rates. Long term inflation continues to come down however, and the annualized CPI fell to 3.1%.
The multifamily market had another strong week last week, as rents and occupancy rates rose in many markets across the country. The leading indicators, including traffic and leasing were mostly flat, but key operating metrics continue to put forth a strong showing through the first six weeks of the year. Occupancy has been the most consistent outperforming metric thus far, as demand continues to hold up against the pressure of new supply.
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This is a narration of our weekly Rent and Operating Trends Report.
It was a quiet week in the economy last week, and most indicators continued their slow and steady growth. All eyes will be on inflation this week from a quantitative perspective. From a qualitative perspective, many of the Fed Governors are slated to speak at various events. While I don’t suspect any specific commentary on the timing of interest rate cuts, the tone and sentiment of each Governor’s comments will be noteworthy. Later this week, the homebuilder sentiment as well as housing starts and building permits data will be released, which should provide additional context into the strength of the housing market.
Multifamily fundamentals had another strong week last week, led mostly by demand indicators. Occupancy continues to grow in 2024, and the number of units available to rent is improving as well. Traffic picked up modestly last week as did net effective rent and revenue per available unit (RevPAU). The only declining metric was leases signed, which fell slightly, but remained in decent position halfway through the first quarter.
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This is a narration of our weekly Rent and Operating Trends Report.
In a rare interview on Sunday evening, Fed Chair Jerome Powell explained on 60 Minutes that the Fed is now planning its first interest rate cut since 2020. Most economists expected rate cuts in 2024, however it is abnormal for the Fed Chair to speak publicly on the matter, especially outside of a policy meeting press conference. While Powell stopped short of estimating when the first cut would come, he inferred that inflation is now under control and he expects annual inflation figures to continue declining, as lagging components, such as housing costs, begin to hit the inflation data. I believe we will see the first rate cut in late Q2 followed by two additional cuts in the second half of the year, but those decisions will be data dependent as we progress through the year. However, it is now clear that the Fed will be cutting rates and Powell took a demonstrative step toward transparency, as he shared his views with the public.
Multifamily performance had another strong week last week with all key metrics increasing from the week prior. Occupancy and traffic led the way once again, and average traffic nationwide is above 7 tours per property, while occupancy climbed above 93.7%. Rent, RevPAU and leases signed all increased modestly as well. Demand appears strong as we move into February, and another steady month should set up nicely for the 2024 leasing season.
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This is a narration of our weekly Rent and Operating Trends Report.
Will you be at NMHC this week? If so, come find us. Blerim Zeqiri, Brad Cribbins, Jay Denton, and I will be at the Apartment Strategies conference and the annual meeting. We would love to share what 2024 has in store for Radix and the multifamily industry.
The economy chugs along with a strong foundation in employment and improving inflation metrics. The Personal Consumption Expenditures Index was released on Friday showing that prices have increased 2.9% from a year ago. The Fed prefers to watch the PCE, and this measure now sits within the target range for policy makers, as they mull the next step on interest rates. Fed officials will vote on monetary policy at their meeting this week and while few expect a change in rates at this meeting, many economists are speculating when the first rate cut will come. I believe the Fed will start easing monetary policy in the second quarter, but softer jobs numbers or lower inflation reports may accelerate the process for the first rate cuts since COVID.
Property fundamentals continue to improve in the short term, while annual growth remains negative for most key metrics. Occupancy is showing a similar trend to last year, and is holding firm, despite expectations of continued declines. Traffic and leasing are improving, indicating a potential early start to the 2024 leasing season.
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This is a narration of our weekly Rent and Operating Trends Report.
The Radix team will be at the NMHC annual meeting next week and we would love to see you there. If you’ll be in attendance please reach out. We will be sharing market insight and forecasts as well as upcoming product updates. We are also excited to open several new markets in Radix Research. Our coverage continues to expand across the southeast, Midwest and West Coast, and new markets include Detroit, Columbus, Sacramento, and Huntsville among others.
Evidence of a strong economy continues to permeate the closing reports from 2023. December retail sales were very strong, increasing 0.6% monthly and 5.6% on an annually. The 2023 holiday season was better than expected, proving that the American consumer is healthy and spending. Consumer activity drives nearly three quarters of GDP, and the strong consumer activity is a positive indication for fourth quarter economic output. Prices may be on the rise because of the strong spending, as we saw the December CPI increase faster than estimates. The Personal Consumption Expenditures Index, the measure of inflation preferred by the Federal Reserve, will be released on Friday, providing further indication of pricing pressure across the market.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy was thrown a slight curveball last week when the December Consumer Price Index came in higher than expected. Inflation increased at an annualized rate of 3.4% marking a modest uptick from previous months. Driving the growth was a 0.4% increase in the shelter index, which relates directly to the cost of housing. However, there is a significant lag in the shelter data for the CPI, and as we’ve reported, housing costs both for rent and for sale homes continue to decline. The energy index also contributed to a large portion of the monthly increase; however, oil prices have been coming down steadily and are near a six-month low. I do not see any significant inflation concerns over the long term, however if inflation remains at its current level, it will likely delay any interest rate cuts from the Fed.
Multifamily fundamentals had another flat week last week, which is a positive sign as we begin the year. Traffic registered a slight increase as apartment renters begin the search for their next home. With a healthy economy and a strong labor market, we are beginning to see housing demand return. Multifamily demand has grown, as persistently high mortgage rates have kept some would-be home buyers in the rental market.
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This is a narration of our weekly Rent and Operating Trends Report.
The first week of 2024 was a mixed bag from an economic perspective. Major equity indices sold off to start the year, led by the tech sector. There has been some concern that the stock market became overvalued after a surprising and very strong 2023. However, late last week the December jobs numbers supported the continued strength of the economy. In December roughly 216,000 new jobs were created bringing the 2023 total to 2.65 million new jobs. Government and Health Care led the way last month adding 90,000 of the 216,000 new positions. The unemployment rate has held steady at 3.7%.
Multifamily fundamentals had a quiet week last week, as the leading indicators edged downward but rent and occupancy were mostly unchanged. Occupancy remains the focal point for the industry as we weather the winter slowdown. Based on last year’s atypical trend, where occupancy was flat through the first half of the year before falling in the summer and fall, I will be interested to see how it performs this year.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy had a surprisingly strong 2023, as prognosticators initially forecast a high chance of recession at the beginning of the year. Instead, equity indices performed very well, with the S&P 500 rising 24%, job growth continued its steady expansion, and economic growth outperformed nearly all expectations. A key driver through it all was the consistent decline in prices as inflation returned to the 2-3% range by the end of the year...
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This is a narration of our weekly Rent and Operating Trends Report.
As we approach the end of 2023, this week’s report will be our last of the year. As such, I looked back over the prior 51 weeks at some of the key trends, predictions and observations we made to identify where we got it right and where we missed the mark.
From an economic perspective, the year began on very shaky footing. I predicted a continued economic slowdown and a rising potential for a recession. Neither occurred this year, and in fact the macro economy strengthened as the year went on. Inflation came down as we anticipated but it did not negatively impact the employment market, consumer activity or GDP. GDP had its strongest quarter in a few years in Q3.
We anticipated the job market would remain the backbone of the economy and while it has softened this year, overall job growth, especially in light of the low unemployment figures, remains quite strong. I predicted that the Fed would continue raising interest rates and remain reactionary, yet to their credit, they saw the slowing trend in inflation and kept rates constant since July. The illusive soft landing now appears doable, when twelve months ago most economists including myself predicted otherwise...
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This is a narration of our weekly Rent and Operating Trends Report.
The Fed is holding its final meeting of the year this week and they are likely to leave interest rates unchanged. After rapidly increasing interest rates through the first half of the year, the Fed has now kept rates stable since July. Many market prognosticators expect rates to drop next year, with some calling for rate cuts as soon as the spring. Given the strength of the economy, I would not expect to see rate cuts until late next year at the earliest. The November Consumer Price Index was released this week, and while inflation inched downward on an annual basis to 3.1%, it remains slightly above the Fed’s target. Higher inflation will keep the Fed from cutting rates, however I do not see this report as a catalyst to raise rates either.
Multifamily fundamentals were mixed last week. Of note, occupancy was flat on a week-over-week basis for the first time in months. One week is not enough to declare a trend, yet stabilizing occupancy would be a great achievement for the industry. Leasing activity was also flat last week while traffic and NER dipped slightly. Another potential point of optimism is that annual growth figures are improving. Occupancy is down only 69 basis points and NER is down only 140 basis points. Both figures were deeper in negative territory over the past few months.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy was given another boost last week as Q3 GDP was revised upward to an annualized rate of 5.2%, making the rate of growth last quarter more than double the rate for the first half of this year. Q3 was also the strongest quarter for economic growth since 2021 when the U.S. economy was still working through the volatile declines and subsequent growth resulting from COVID-19. Consumer activity remains healthy and the employment market continues its upward climb. November job growth will be released on Friday, but I expect another steady month of job gains. Weekly unemployment claims remain in line with long-term averages.
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This is a narration of our weekly Rent and Operating Trends Report.
It was a fairly quiet week in the U.S. economy as the Thanksgiving holiday limited data releases last week. Existing trends continued from the prior week as the 10-year treasury continued to drift lower. The yield on the 10-year is now 4.42%, nearly 60 basis points below its recent peak in mid-October. Oil prices continue to fall, with WTI Crude Oil trading around $75 per barrel, down from $93 in recent months. The slowdown in oil prices will help keep inflation at bay and potentially allow the Fed to end its monetary tightening. GDP will be released this week and November job gains will be reported next week. Key inflation indicators will also be announced prior to the Fed’s next interest rate announcement.
Multifamily fundamentals have not deviated from their slow decline. Leading indicators were mostly flat last week, while lagging indicators continued to fall. The recent speculation that interest rate increases may be finished has spurred some excitement in the transaction market, as buyers and sellers are beginning to come together on deal terms. Transaction activity has not increased meaningfully yet, but the combination of maturing loans, expiring rate caps and stability in the interest rate market will likely bring an uptick in transaction activity.
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This is a narration of our weekly Rent and Operating Trends Report.
Is the monetary tightening cycle over? Has the Fed orchestrated the illusive soft landing for our economy, reducing inflation to a sustainable level without sending the nation into recession? The answers to these questions are still yet to be fully determined, however last week’s lower inflation report provides further evidence that future interest rate increases me not be needed. Inflation dropped meaningfully in October compared to prior months, and annual prices are up only 3.2% from a year ago. As we approach the winter months, lower oil prices will likely keep inflation modest. With inflation in check and economic growth remaining robust, the possibility of a soft landing is growing. Most inflationary environments end in recession, however GDP remains strong and job growth is steady, especially given how tight the labor market remains.
The multifamily industry continues its steady fundamental decline as the holidays approach. Rents nationwide slid again last week, but the annual declines appear to have flatlined around 1.5%. Occupancy is falling but at a slower pace than a few months ago. With additional supply delivering, especially in the southeast and Texas, occupancy will likely decline for the foreseeable future.
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This is a narration of our weekly Rent and Operating Trends Report.
The 10-year treasury is down about 35 basis points from its recent high in mid-October as signs of slowing fundamentals in the economy continue to arise. Mortgage rates have also fallen in recent weeks, prompting a slight uptick in demand for mortgages. The recent drop in mortgage rates may bring some renters back into the buyer pool, cutting into multifamily performance, however, I expect this to impact apartment demand only marginally.
U.S. equity markets have performed well in recent weeks, leading some forecasters to call for a year-end rally across the stock market. Major indices have bounced back significantly since recent lows at the end of October. Economists are predicting a strong fourth quarter for consumer spending despite credit card debt reaching a record in recent weeks. Sentiment surveys indicate that the American consumer is pessimistic about the state of the U.S. economy, yet retail sales and consumer spending continue to increase. The U.S. economy is holding strong, but there are some cracks emerging.
Apartment fundamentals are predictably declining as we approach the end of the year. Rent and occupancy fell modestly last week, while traffic and leasing were flat. Revenue per available unit (RevPAU) dipped as the compounding effect of declining rent and occupancy sent RevPAU further into negative territory.
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This is a narration of our weekly Rent and Operating Trends Report.
October employment growth was weaker than it had been in previous months with new job gains totaling 150,000. August and September gains were revised down, painting a slightly more bleak picture of the employment market than we have seen in recent months. As a result, the 10-year treasury retreated quickly, although it remains high at 4.6%. The October jobs report is not a red flag for the economy in my opinion, as volatility in the jobs numbers has been common since the recovery from COVID-19 began. Unemployment is still historically low at 3.9% and job openings far outpace the number of people looking for jobs. In fact, the rising unemployment figures may indicate a positive trend as more people re-enter the labor force. Job growth is slowing overall, but we continue to add new jobs in the 150,000-200,000 range. Given how tight the labor market is, I view the employment market as a continued point of strength for the macro-economy.
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This is a narration of our weekly Multifamily Market Report.
The apartment market is slowing down in a number of metros nationwide, with most markets falling into one of two buckets of underperformance. Metros in the southeast and southwest are experiencing some of the most new construction since the 1980’s resulting in immense new supply pressure, despite some of the strongest demand drivers in the nation. On the other hand, a few west coast markets are seeing property fundamentals decline as the result of reduced demand, even though new supply has not been a major issue. Portland falls into the latter category, with limited demand and moderate supply.
Job growth has remained steady and the employment market is tight, however outmigration from the Portland MSA as well as some social and regulatory challenges has put a damper on performance. Leading apartment metrics are down in Portland and are indicating a challenging period ahead for the multifamily industry.
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Portland apartment fundamentals have declined in recent months as many markets across the country begin to see growth dip negative. However, as Rebecca Sands, Vice President at RPM, points out, context in this market is critical, and Portland has been one of the best performing markets on a compound annual growth basis for the past 10 years. Suburban multifamily is doing well and some urban pockets like Slabtown are holding their own. New supply is an issue in some areas, but the long term growth prospects are decent and there’s reason for optimism in the Portland market. Check out our latest podcast with Rebecca Sands for more local insight!
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This is a narration of our weekly Rent and Operating Trends Report.
U.S. economic growth is gaining momentum following a very strong initial estimate of Q3 GDP. The broad measure of economic output showed the economy expanding at a 4.9% annual rate, more than double the growth rate from the first half of the year. Despite higher interest rates throughout the quarter, the American consumer continued to spend. Inventory growth also helped push GDP growth higher. The Fed will meet this week, and while GDP and inflation are not directly linked, the rapid growth in economic activity combined with strong consumer activity could encourage the Fed to increase interest rates again.
Oil prices have come down in recent weeks, falling roughly $10 from a recent peak at the end of September. I expect the normalization of oil prices to lead to lower inflation in the coming months. As the U.S. economy continues to stabilize and grow, global risks appear to the be only dark cloud on the horizon at this point. Escalating tensions in the middle east could weigh on the domestic economy, but given the current strength, I do not expect a major economic slowdown.
Apartment fundamentals continued their steady decline last week, with occupancy and rent leading the way. Occupancy fell another 5 basis points and is now firmly below 94% nationwide. Net effective rent fell another 20 basis points last week and nationwide, rents are down $33 from the mid-summer peak. Leading indicators, including traffic and leasing have remained flat.
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This is a narration of our weekly Multifamily Market Report.
Denver apartment fundamentals are holding firm and growing slowly as we near the end of 2023. However, in this market growth of any kind is good growth, as most markets are experiencing declining fundamentals. Annual rent growth remains positive in the Mile High City and occupancy losses have been some of the lightest in the nation. Leading indicators have been mostly flat on both a short- and long-term basis.
Migration has slowed compared to the boom Denver saw in the mid to late-2010’s, but the supply pipeline has also started to soften leaving less pressure on new and existing lease ups. Pockets of heavy supply remain, especially in Rino, Golden Triangle, and parts of Aurora, but the days of intense new supply across the metro appear to be behind us. The employment market remains tight, which should serve as a strong driver of demand as we enter a new multifamily cycle.
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Multifamily fundamentals have cooled in most markets nationwide, but Denver is maintaining its strength. As one of the few markets still seeing annual rent growth, the Mile High City is well positioned in the current market turbulence. As David Polewchak, Vice President of Asset Management at Orion Real Estate Partners, explains, supply is starting to wane, while demand has been steady across metro Denver. In-migration continues, bolstering occupancy and rent growth. Opportunities in suburban Denver and smaller cities along the Front Range exist, as infrastructure development and work from home policies allow Denver workers to live in many places from Fort Collins to Colorado Springs. Check out this week’s podcast for more information on the state of multifamily in Colorado.
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This is a narration of our weekly Rent and Operating Trends Report.
In what is perhaps something of a silver lining for the rental housing sector, recent data suggests it is the most expensive time to buy a single family home since the mid 1990s. But, as with all things in the current real estate market, there is more to the story.
The economy as a whole is doing generally well, but the housing market remains remarkably challenged. There were just 1.13 million homes on the market nationwide in September, the lowest total on record for any September.
With an extremely limited number of existing homes for sale on the market, and ever-higher interest rates driving up the cost of home ownership relative to renting, this, all else being equal would be a boon for institutional landlords, however the substantial recently delivered and soon to be delivered supply of apartments is putting the brakes on rent and occupancy growth.
Leading indicators like traffic and leasing remained flat nationwide last week, while we saw a continuation of the recent downward trends in RevPAU.
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The Phoenix market has been one of the most active MSA’s for new supply over the past few years. As a result, the new units available have combined with a softening in demand to slow property performance and send most multifamily metrics into negative territory. However, as Dex Hiland, Director of Client Services at Greystar points out, the long-term demand drivers including migration, job growth, high tech manufacturing and others should foster another growth cycle in Phoenix, once the current supply wave abates. In this week’s Radix Research Podcast, we dive deep into the Phoenix market and discuss where the future growth will likely occur.
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This is a narration of our weekly Multifamily Market Report.
Phoenix has seen a rapid slowdown over the past year, as apartment performance declined amid high supply. However, as we near the end of 2023, leading indicators are beginning to show signs of strength for Phoenix multifamily. Lagging indicators remain negative, and will likely continue contracting through the winter months, yet the recent uptick in traffic and leasing bodes well for the intermediate term in the Valley.
The Arizona capital remains a very attractive market for domestic and corporate migration. High end manufacturing in the Valley has emerged as one of the largest growth industries; companies like Taiwan Semiconductors and Intel are leading the way with multi-billion dollar investments in new and expanding microchip facilities. New apartment supply has been an issue and will still have an impact as lease-ups are taking longer than originally anticipated. With a robust planned pipeline, the future performance of Phoenix’s multifamily industry may rest in how many new developments break ground in the coming year.
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This is a narration of our weekly Rent and Operating Trends Report.
Inflation remained unchanged in September with prices rising 3.7% compared to the year before. Annual price increases were flat after increasing in both June and July, according to the Consumer Price Index. On a short-term basis, prices increased 0.4% from the prior month. While the reported figures were slightly higher than analysts’ expectations, I do not think this report will materially change the course of the Fed’s monetary tightening cycle. I anticipate one more interest rate increase this year, at either the November or December meeting. The 10-year treasury has retreated from recent highs, but remains elevated at 4.6%.
Apartment performance continues to decline, with rent and occupancy falling the fastest last week. Leading indicators appear to have stabilized, and the national conversion ratio has remained steady around 33%, but occupancy has fallen quickly over the past 4-6 weeks and rents are falling along with it. At the national level, the slowdown is likely to continue through the end of the year and into early next year before some stability is found.
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This is a narration of our weekly Rent and Operating Trends Report.
The economy and interest rate market are working in opposite directions at this point in the cycle. 336,000 new jobs were added in September, nearly doubling analyst expectations. While this is good news for the overall economy, it raises additional questions about the Fed’s course of action with monetary policy going forward. Continued strength across the labor market and macro economy will give the Fed room and reason to increase rates again at its upcoming meetings. Many suspect the Fed will raise rates at one of the remaining meetings this year, but if the economy continues to grow quickly, additional rate hikes may be in the cards. The 10-year treasury continues to push new heights based on the strength of the economy, the likelihood that short term rates will be higher for longer, and new geopolitical concerns brewing. War in the Middle East as well as increasing concern about an upcoming summit between the U.S. and China has pushed oil prices higher in recent days. If oil remains elevated rather than experiencing its typical Q4 slowdown, then inflation numbers are likely to stay elevated as well. The U.S. economy is in good shape, but with every subsequent positive report, the likelihood of higher interest rates for a longer period increases.
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This is a narration of our weekly Rent and Operating Trends Report.
We are excited to announce some new changes to the Rent and Operating Trends Report beginning this week. Revenue per Available Unit (RevPAU) is a comprehensive apartment performance metric that combines net effective rent with occupancy to identify the total potential revenue given the number of operational units in a property, submarket or MSA. As property fundamentals have changed rapidly over the past 12 months, this metric is a single data point that captures the impact of two of the most important performance drivers in our industry and will give a clear overall picture of how the apartment market is performing as we navigate the turbulent waters ahead. We’ve also switched our net effective rent figures in this report to show our same store sample...
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New supply is dragging down rents and occupancy rates across the Atlanta metro. An increase in fraudulent applications is adding additional challenges to property managers in the metro. With a number of headwinds facing Atlanta operators hear what local expert Chris Burns, Senior Vice President at Lincoln Property Company expects to see in the market in the coming year.
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This is a narration of our weekly Multifamily Market Report.
Atlanta’s apartment market is struggling as new supply weighs heavily on performance from the property level all the way to the market level. The local economy continues to flourish as job growth and population growth remain among the best in the country, however the onslaught of new apartment construction has outpaced demand. Suburban properties are outperforming urban properties, especially in locations with less supply, yet operating fundamentals are down in all submarkets. This current wave of supply will eventually dissipate and the strong demand drivers that endure will bring apartment performance in Atlanta back to its historical trend, but it will be a challenging market to operate in for the next 12 to 18 months.
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This is a narration of our weekly Rent and Operating Trends Report.
An inverted yield curve, where long term interest rates are higher than short term interest rates, is often a leading indicator for a recession. In late 2022, during the Fed’s aggressive monetary tightening, the yield curve inverted and remains inverted nearly a year later. However, as the Fed has slowed down their interest rate hikes, the 10-year treasury yield has been increasing rapidly. In the past month the 10-year treasury has increased 40 basis points and sits at its highest level since 2007...
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy awaits another Fed meeting, scheduled for Tuesday and Wednesday of this week. Most economists predict that the Fed will hold rates steady at the upcoming meeting, but it is far from an indication that the monetary tightening cycle has concluded. There is still belief that the Fed could raise one more time in 2023, and recent inflation numbers that have come in higher than expected could provide evidence to the Fed that more monetary tightening is needed...
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This is a narration of our weekly Multifamily Market Report.
While Seattle is not commonly referred to as a Gateway market, its fundamentals often follow many of the tech-heavy Gateway’s on the west coast and in the northeast. As the multifamily industry cools amid significant new supply pressure, Seattle is once again trending like its peers. Traffic, overall occupancy, and occupancy growth are tracking in line with Los Angeles and Boston, while significant rent declines are tracking with San Francisco...
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The national apartment transaction market has been significantly challenged by rising interest rates and softening fundamentals and the Seattle market is no different. While return to office mandates are helping revitalize the urban core in Seattle to an extent, it is still difficult to finalize deals with such uncertainty in monetary policy. Yet the framework for a vibrant economy and robust multifamily market remain in Seattle. The current new supply wave will need to be absorbed, and it will be over time, as major tech companies like Amazon and Microsoft, as well as other Fortune 500 companies like Starbucks and Boeing, create a diverse and talented employment base. Listen to our discussion with local expert Matt Kemper for more insight on the Seattle multifamily environment.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy continues its steady march forward, as most key indicators have maintained their recent trends. August job growth was strong once again, as the labor force added 187,000 new jobs. The unemployment rate increased to 3.8%, but some of the increase in unemployment can be attributed to the continuous growth in labor force participation. While the labor force is not yet back to its pre-COVID levels, participation is expanding modestly and steadily. With such tight labor conditions and new jobs being formed each month...
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This week's Radix Metro Podcast focuses on San Antonio.
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This is a narration of our weekly Multifamily Market Report.
The San Antonio market has been among the weakest performing MSAs in the nation over the past year, as a once hot apartment market has turned negative quickly. All key indicators lag the national average and are also negative on both short and long-term bases. Traditionally a stable market with a heavy military influence, the San Antonio market has been a hotbed for in-migration, healthcare and tech growth in recent years...
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy continues its steady growth as the calendar turns to September. While monetary policy is still up in the air, and as a result investment markets remain turbulent, major economic fundamentals have stabilized. The Personal Consumption Expenditures Index increased by 3.3% on an annualized basis, but the 0.2% monthly increase in July is in line with the Fed’s target rate of inflation. Second quarter GDP was revised downward to 2.1% annualized from 2.4% the previous month. Despite the slight reduction, overall growth remains steady...
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This is a narration of our weekly Multifamily Market Report.
Over the past three years, one of the steadiest and best performing markets nationwide has been San Diego. The Southern California metro did not experience as significant of a decline in housing demand and rents seen in Los Angeles and San Francisco in the early days of COVID-19, but the metro had a very strong recovery in 2021 and 2022. This year, as other hot secondary markets in the southeast and southwest have cooled down rapidly, San Diego has maintained its growth, and is still seeing annual rent increases in most submarkets. The combination of a limited downturn and consistent rent growth has pushed San Diego to the fourth most expensive metro in the country for net effective rents.
Demand remains elevated in San Diego and new supply will not be an issue. As rents grow, affordability may become a concern once again, however in the short term, San Diego is poised for great multifamily performance.
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This is a narration of our weekly Rent and Operating Trends Report.
Fed Chair Jerome Powell gave a very middle of the road speech last week at the Kansas City Fed’s Jackson Hole symposium. The leader of the central bank acknowledged that tightening monetary policy has had its desired impact on inflation, but also warned that inflation may come back, thus warranting further interest rate increases. He neither suggested nor refuted that another interest rate hike would be needed, and the Fed will continue to monitor pertinent economic data before making their next policy decision in a few weeks. Two key data points they will be monitoring will be the Personal Consumption Expenditures Index (PCE) and second quarter Gross Domestic Product, both of which will be released this week. The PCE index is the Fed’s preferred inflation indicator and as of June measured 3.0% growth on an annual basis, just at the top end of the Fed’s ideal range.
Apartment performance continues to decline modestly at the national level. Rents are falling on a week-over-week basis, and leading indicators including traffic and leasing are either flat or negative from week to week. Interestingly occupancy has increased by the smallest of margins in each of the past two weeks, however the slight growth is not enough to indicate a longer-term trend in my opinion. With roughly four months remaining in 2023, key operating metrics will likely continue to soften, but the overall housing shortage and the increasing cost of home ownership will protect our industry from any major declines. Market-by-market weakness will be apparent as new supply is delivered and absorbed.
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We recently sat down with Gleb Nechayev, Head of Research and Chief Economist at Berkshire Residential Investment to talk about the multifamily industry in Boston. Gleb shares key insights into what makes Boston one of the strongest performing markets in 2023 and what might be in store for the apartment industry in the coming months. Tune in for our first podcast in the new Radix Metro Report series!
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This is a narration of our weekly Multifamily Market Report.
Boston, like many of its northeastern peer markets, is known for its older apartment stock and higher percentage of single-family homes compared to secondary markets in the south and west. However, as the market is known for innovation, it’s apartment market has grown and evolved quickly over the past few real estate cycles. Rent and operating metrics have performed well over the past year, outpacing the rest of the nation that is currently slowing down from historic highs. Gateway markets are often the first to recover, and Boston is once again leading the way, as most of the nation remains mired in a slog of weak apartment fundamentals.
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This is a narration of our weekly Rent and Operating Trends Report.
Economists will be focused more on the qualitative information coming out this week than the quantitative data being released. The Kansas City Fed hosts its annual symposium in Jackson Hole, and Chair Jerome Powell will be delivering the keynote address on Friday. Ahead of the meeting, three other Fed governors are expected to give speeches on Tuesday. While it is unlikely the leaders of the Fed will share explicit information regarding upcoming monetary policy changes, their tone and language should provide insight into additional rate hikes or the end of monetary tightening. The 10-year treasury rate, which typically follows the market’s view of intermediate to long-term inflation, has been rising rapidly in the past few weeks. It currently sits at its highest yield since 2007.
The multifamily market continued its moderation last week. Net effective rent fell 10 basis points last week, the second consecutive week of rent declines at the national level. This marks the first back-to-back NER drop since last December. Occupancy increased ever so slightly, rising one basis point last week. Nationwide occupancy remains almost a full percentage point below its level from this time last year. Traffic and leasing remain stable as the third quarter progresses.
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This is a narration of our weekly Rent and Operating Trends Report.
Inflation rose modestly last week, as the July CPI checked in at a 3.2% annualized rate, slightly above the June read, but below analysts’ expectations. While I don’t think this will be enough of a move to force the Fed to raise rates again, the rest of the yield curve continues to increase. The 10-year treasury yield is 4.19% as of Monday, nearing its recent high, last seen in October 2022. If it breaks above 4.25% it will be the first time the 10-year yield has been that high since 2007. Most home mortgages and fixed rate multifamily mortgages are tied to the 10-year, and given the recent increase in long-term rates, these financial instruments are getting significantly more expensive. The average home mortgage rate is nearing 8%. This may serve as a silver lining for multifamily demand, as fewer would-be home buyers are able to afford to purchase homes. However, the increase in both long and short-term interest rates is making it very difficult for multifamily owners to refinance existing assets, many of which carry interest rates far lower than the current market.
Multifamily fundamentals were mostly flat last week, a typical pattern for this time of year. At the market level, weekly growth remains mixed as some metros are enjoying an extended leasing season, while others are declining against a backdrop of heavy supply and soft demand. As this week’s chart of the week demonstrated, all MSAs are losing occupancy on an annual basis, yet roughly 15% of submarkets across the nation have seen occupancy rise over the past year. As our industry slogs through a down cycle, it is important to note that not all submarkets or MSAs will act alike.
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This is a narration of our weekly Rent and Operating Trends Report.
A wave of multifamily maturities has been building for the better part of three years. Loans originated in late 2020 and 2021, held historically low initial interest rates, and experienced some of the fastest rent growth in history during their first year. While economic and multifamily fundamentals have changed, beginning in late Q1 2022, there was little concern for the value of multifamily assets until early this year. The speed and consistency with which interest rates rose surprised many. We began analyzing the impact of rising interest rates on floating rate debt in a paper published in April. But only now, a few months before the initial loans from late 2020 come due, is this becoming a major story outside our industry. Today’s Wall Street Journal ran an article looking at the volume of loans coming due in the next few years and the impact higher rates will have on valuations. Other major media outlets are starting to cover foreclosures in markets including San Francisco, Houston, and Los Angeles. Some metros are performing better than others from an operational perspective; however the impact of rising rates will hurt all markets, and very few if any will escape unscathed over the next 18 months. Multifamily loans with fixed rate debt will perform significantly better and are positioned to potentially weather the storm, but floating rate debt and the properties that are financed with it will feel the brunt of the pain from falling valuations.
Multifamily fundamentals had a decent week last week, with occupancy and ATR improving, while traffic and leasing were flat and NER declined modestly. Historically, operating metrics oscillate in the third quarter, before declining steadily in the fourth quarter. I expect this year will follow a similar trend and the next few months will show some upward and downward movement, but an overall flat outcome.
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This is a narration of our weekly Rent and Operating Trends Report.
The Fed raised interest rates once again last week, bringing the benchmark short-term rate to a range of 5.25-5.50%. The change has had a very mild impact on capital markets, as major equity indices, commodity markets and long-term interest rates increased modestly. Yet each incremental increase will have a significant impact on multifamily valuations in the coming months. As loans that originated in late 2020 and early 2021 come due in the next few months, we are likely to see a significant increase in cap rates and a drop in valuations as the cost of borrowing has skyrocketed. The hit to valuations will only be exacerbated in several markets, as operating fundamentals have declined, leaving properties with lower net operating income than previously forecast. I do not expect the Fed to lower rates in the near future, which means many property owners will need to re-evaluate return expectations as a wave of loan maturities and transactions takes over the market in the next 18 months.
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This is a narration of our weekly Rent and Operating Trends Report.
Economists will be focused this week on monetary policy as well as the first release of Q2 GDP. The Fed will meet on Tuesday and Wednesday, and while most forecasters anticipate another 25-basis point increase in interest rates, expectations are mixed on whether or not the Federal Open Markets Committee will raise interest rates again after this week. The Committee raised the Fed Funds rate from 0% to 5.25% in just 14 months, but then paused their monetary tightening at their last meeting. Many key inflation indicators such as the Consumer Price Index and the Personal Consumption Expenditures Index have retreated meaningfully in recent weeks. The Employment-Cost Index will be released Friday and represents the most comprehensive measure of wage growth. Recent strength in the labor market is leading some economists to forecast higher wage growth, thus pushing the Fed to keep interest rates higher for longer.
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This is a narration of our weekly Rent and Operating Trends Report.
The June consumer price index showed weaker inflation than economists estimated, with prices rising 20 basis points month-over-month. On an annual basis the CPI increased 3.0%. While the Fed prefers to monitor the personal consumption expenditures index for inflation, last week’s CPI release will be the final data point on inflation before the next Fed meeting. There has been heightened speculation that the Fed will raise interest rates again next week, after taking a pause in June. However, the Fed has also been transparent in its desire to bring inflation back to the 2-3% range. Now that price growth has cooled to that range, many economists are arguing for the Fed to keep their policy actions neutral. Momentum has clearly shown that inflation is slowing, based heavily on the monetary tightening the Fed has already enacted. Whether or not the Fed raises next week, the economic indicators have clearly displayed the need to end the tightening cycle.
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This is a narration of our weekly Rent and Operating Trends Report.
The June jobs report showed continued steady growth, as 209,000 new jobs were created, and the unemployment rate fell 10 basis points to 3.6%. Economists had estimated 240,000 new jobs to be created and despite the slightly weaker than expected report, interest rates across the treasury yield curve increased with the 10-year treasury rate topping 4% for the first time since March. The cause for the sudden increase in rates is wage inflation. Average hourly earnings were up 4.4% on a year-over-year basis in June, and the elevated wage growth will increase the Fed’s likelihood of raising their benchmark interest rate again at their meeting at the end of this month. Signs of a strong economy remain, yet the persistence of inflation will likely keep the Fed committed to their monetary tightening policy.
Multifamily fundamentals were mixed last week; occupancy and traffic declined modestly while ATR and NER improved. The general sluggishness in leading indicators provides further evidence that the traditional spring rental season was weaker than in years past, and we may have already begun the flattening of fundamentals that is usually seen late in the third quarter. NER continues to increase slowly, but year-to-date rent growth is below the historical average.
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This is a narration of our weekly Rent and Operating Trends Report.
The first half of 2023 has been marked by economic volatility, major regional bank failures, continued monetary tightening and ample talk of an upcoming recession. However, the overall economy remains on steady footing. GDP increased at a 2% annualized rate in Q1 according to the final estimate released last week. Employment remains the backbone of the economy, as the American labor force continues to add jobs at a very strong rate. The public equity markets have had a very good start to the year with the S&P 500 up 16.4% year-to-date. Inflation continues to decelerate, as the Personal Consumption Expenditures index posted a 3.8% annual growth rate in May. As of now, the soft landing that many economists were questioning when the Fed began raising rates at a torrid pace, is very much in play. There may be a slight recession, or the economy may continue its expansion. Either way, the magnitude of growth or decline will be limited in the second half of 2023 and into 2024.
Multifamily fundamentals remained flat to end the first half of the year, providing further evidence of a generally weak spring leasing season. Net effective rent is down 80 basis points year-over-year, and it is difficult to see that trend reversing over the course of the next six months. I expect a typical late Q3 and Q4 rent decline, which should keep year-over-year rent growth negative at the national level. Traffic and leases have yet to decline, but they did not experience significant growth during Q2. Spring is traditionally the strongest period for leading indicators, and the growth we’ve seen in past years just never materialized this year. Occupancy continues to decline and may drop below 94% at the national level if renter demand weakens further
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This is a narration of our weekly Rent and Operating Trends Report.
As we approach the end of the second quarter there will be two key economic indicators released this week. The final estimate of Q1 GDP will be released on Thursday. First quarter GDP had initially been reported at a 1.1% growth rate but was revised upward to 1.3%. Many economists have been predicting a recession but have not given a hard timeframe on when the recession will begin. A weak final estimate of Q1 GDP could portend a downturn in the coming quarters. The May Personal Consumption Expenditures Index will be released on Friday. As the Fed’s preferred measure of inflation, this reading will give us a decent sense of where the Fed is heading at its upcoming meeting in late July. An annual inflation number in the 4-5% range will likely lead the Fed to raise rates another quarter percent.
Property performance was mostly unchanged through mid-June, although occupancy nationwide continues to fall. Traffic and leasing were flat last week, while NER grew modestly. We have yet to see a strong leasing season materialize this year, and I would expect to see fundamentals beginning to soften over the next six to eight weeks. A normal seasonal slowdown in the late third and fourth quarters would leave national apartment fundamentals in negative territory on an annual basis.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy rests on solid footing following last week’s Fed meeting. Interest rates remained flat last week, and while the Fed may yet raise rates once or twice more this year, the end of the tightening cycle is clearly in view. Inflation continues to slow down, yet the consumer remains strong. Both retail sales and consumer sentiment for May were released after the Fed meeting, with both metrics exceeding analyst expectations. Unemployment remains low and job formation continues, underpinning the strength of the economy. There will continue to be micro-recessions in different sectors of the economy, especially those dependent on leverage and debt financing, yet the macro economy will likely continue to move forward at a slow and steady pace.
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This is a narration of our weekly Rent and Operating Trends Report.
As the Fed prepares for its upcoming meeting, the consensus on the immediate future of monetary policy remains split. Many economists are predicting another interest rate hike, as the employment market remains incredibly tight, and inflation has moved upward again in recent months. There are others who believe that the work the Fed has done to curtail inflation is enough, at least for the time being. The Fed governors themselves appear to be split based on recent comments from several the voting board members. There will be one more important release, the Consumer Price Index, on Tuesday, before the Fed concludes their next meeting on Wednesday. While CPI is not the preferred inflation indicator of the Fed, they will certainly be watching for any last-minute changes to inflation before their final vote on monetary policy.
Multifamily fundamentals were mixed last week as NER increased another 10 basis points. Traffic and leasing were flat at the national level, while occupancy dropped slightly. June is typically the strongest month of the year in the apartment industry, and the general steadiness is an indication we will see weaker performance in 2023 than originally expected. Continued demand has created a solid foundation for our industry, but growth will be hard to come by at the national level.
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy, specifically the employment market, remains stalwart as growth continued in May. Roughly 340,000 new jobs were added last month, giving many economists hope that we may avoid a recession this year. Despite continuously rising interest rates and persistent inflation, the employment market has added jobs in each of the past 29 months. Over the last 12 months, roughly 3.8 million jobs have been added. While some sectors like tech and media continue to make headlines with layoffs, the broader economy is adding jobs in almost every sector. Wage growth is also increasing, and average hourly wages are up 4.3% year-over-year. While this level of growth is above the long-term average, it does not represent extreme wage inflation. Continued wage growth should help residents handle increased rents and housing expenses. Last week’s jobs report was not all rosy, as the unemployment rate increased 30 basis points. However, with overall unemployment at 3.7%, and new job formations north of 300,000, there is little concern as to the general state of our job market.
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This is a narration of our weekly Rent and Operating Trends Report.
The Personal Consumption Expenditures Index (PCE) increased unexpectedly last month, which has given economists doubt that the Fed is finished with their current monetary tightening campaign. James Bullard, President of the St. Louis Fed, mentioned last week that he sees the need for two additional interest rate hikes to slow down inflation. On the other hand, Neel Kashkari, President of the Minneapolis Fed indicated that the FOMC should pause its rate hikes in June but cautions that a pause may not mean a complete end to the current tightening cycle. There are still three weeks until the Fed’s next meeting, and the economic climate may shift, however, there is growing belief that interest rates could still go higher. I was firmly in the camp that rates would remain unchanged for the rest of this year, but in the wake of the last PCE report, I believe there will be at least one more rate hike at some point in 2023
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This is a narration of our weekly Rent and Operating Trends Report.
This will be an important week both from a data and commentary perspective as it relates to the Fed’s future decisions on monetary policy. The Personal Consumption Expenditures index, the Fed’s preferred measure of inflation, will be released Friday. Six different Fed Governors or Regional Fed Presidents are also scheduled to give speeches this week.
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This is a narration of our weekly Rent and Operating Trends Report.
I anticipate a quiet week on the economic front, as none of the major indicators will be released this week. As we’ve mentioned in recent reports, the macro-economy has entered a period of relative stability as interest rates appear to be stationary and long-term fundamentals are returning to normal. A significantly negative yield curve continues to support the idea that inflation is coming down, and we may see a decline in short terms rates toward the end of this year or early next year
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This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy continues its trend of stabilization as we move into May, with job growth remaining the strongest aspect of our nation’s economy. 253,000 new jobs were added across the country last month, and the unemployment rate dropped to a 6 decade low of 3.4%.
Wage inflation has endured, but annual wage gains are now averaging 4.4%, a slower pace than seen over the past few years, and a much more sustainable rate as we go forward.
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This is a narration of our weekly Rent and Operating Trends Report.
The Fed will meet on Tuesday and Wednesday this week, and economists anticipate another interest rate hike of 25 basis points, bringing the Fed Funds target rate to between 5.0% and 5.25%.
There is widespread speculation that this will be the last interest rate increase, as inflation metrics are trending downward, even if they remain above the Fed’s target.
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This is a narration of our weekly Rent and Operating Trends Report.
Q1 GDP came in at 1.1% annualized, indicating a slowdown from recent quarters. Is this a precursor for a coming recession? The multifamily industry chugs along as we enter the middle of the prime leasing season.
Don't miss out on this comprehensive overview of the multifamily market trends. Listen to the full episode and stay ahead of the curve with the latest data and expert insights.
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This is a narration of our weekly Rent and Operating Trends Report.
We get our first view of Q1 GDP this week along with the March Personal Consumption Expenditures Index. These economic indicators should give us a good understanding of how the Fed will act at it's upcoming policy meeting next week. The multifamily industry chugs along as we enter the middle of the prime leasing season.
Don't miss out on this comprehensive overview of the multifamily market trends. Listen to the full episode and stay ahead of the curve with the latest data and expert insights.
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This is a narration of our weekly Rent and Operating Trends Report.
Discover how inflation normalizing at 5% annual growth is affecting the market and why the Federal Reserve may halt rate hikes to prevent further economic slowdown. Our analysis also highlights the current stability of the multifamily market, including rent growth and occupancy rates across various regions in the United States.
Don't miss out on this comprehensive overview of the multifamily market trends. Listen to the full episode and stay ahead of the curve with the latest data and expert insights.
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This is a narration of our weekly Rent and Operating Trends Report.
For much of the past two years, the employment market has been the anchor of the U.S. economy, as strong job growth continuously countered the significant inflation and interest rate headwinds. However, that may be shifting, as the March jobs report missed expectations, the first miss in 12 months. This does not portend doomsday in the employment market; 236,000 new jobs were still added in March. For reference the last growth cycle between 2010 and 2019 averaged roughly 190,000 new jobs per month.
Tune in for more information on multifamily dynamics during the week of April 9th 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The US economy grew 2.9% in Q4 2022, Atlanta Fed predicts 1.7% for Q1 2023. Softening inflation fears have led to a drop in the 10-year treasury rate, which is good news for the multifamily transaction market. Fundamentals have improved across the board, with rising occupancy and net effective rent (NER) growth in many markets. While NER in most markets is increasing, Salt Lake City and Jacksonville lag behind with the largest NER declines last week.
Tune in for more information on multifamily dynamics during the week of April 3rd 2023.
This is a narration of our weekly Rent and Operating Trends Report.
Thus far, the U.S. economy is handling the recent banking crisis and last week’s interest rate hike well. Capital markets have remained stable and appear to be reacting positively to the Fed’s position on the economy. During his press conference following the last FOMC meeting Fed Chair Jerome Powell intimated that the monetary tightening cycle will likely end soon, and market prognosticators now predict one more 25 basis point increase in May before an extended period of flat interest rates.
Tune in for more information on multifamily dynamics during the week of March 26th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
After a turbulent week in the economy last week, all eyes will shift to the Federal Open Market Committee meeting, scheduled to take place Tuesday and Wednesday. The Fed has already begun slowing the pace at which they are raising interest rates, and economists believe that the failures of Silicon Valley Bank and Signature Bank can be traced back, in part, to the rapid rise in rates.
Tune in for more information on multifamily dynamics during the week of March 19th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
Another strong employment report was overshadowed by the collapse of two regional banks last week and over the weekend. Silicon Valley Bank was taken over by federal regulators and Signature Bank was closed by state regulators after concerns over the safety and availability of deposits led to a run on both banks. The Biden Administration, Treasury Department and FDIC have intervened to ensure the stability of the bank’s depositors and allow them to withdraw deposits even above the FDIC insured level. The downfall of these two banks represents the largest shock to the banking system since the Great Financial Crisis, and will have knock on effects throughout the economy.
Tune in for more information on multifamily dynamics during the week of March 12th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
This week, all eyes are on Capitol Hill as Fed Chair Jerome Powell begins a two-day testimony to Congress on interest rate hikes. Regional Fed Presidents have been advocating for more hawkish policy, and Powell's tone will likely dictate the Fed's next move. The February jobs report and inflation data will also impact the direction of interest rates. In the apartment industry, traffic nationwide has increased modestly, but most rent and operating metrics have yet to show signs of major growth.
Tune in to find out more information on multifamily dynamics during the week of March 5th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The capital markets are experiencing volatility due to slightly higher than expected inflation numbers, causing investors to seek stability. However, employment remains strong with new unemployment claims falling below 200,000 for the fifth consecutive week. Multifamily rent and metrics were flat in February, except for Chicago, which saw growth in traffic, leasing, and occupancy, leading to an increase in rent.
Tune in to find out more information on multifamily dynamics during the week of February 26th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy continues to perform well as we progress through 2023. While oil prices have remained relatively range bound for the past 5 months, gasoline prices have begun to creep upward from their late December lows. With inflation continuing to run higher than expected, a significant rise in gas prices could again hurt the consumer through the spring and summer.
Tune in to find out more information on multifamily dynamics during the week of February 19th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The economy continues to churn forward as we approach the midpoint of the first quarter. Employment remains the strongest facet of the domestic economy, with job gains outpacing estimates and new jobless claims falling well below long-term averages.
Tune in to find out more information on multifamily dynamics during the week of February 12th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The US employment market is growing with over 500k new jobs and an unemployment rate of 3.4%. Sectors including leisure and hospitality, professional and business services, government, and healthcare are growing. Wages have increased 4.4% YoY, with a slowing pace seen as positive by economists. Corporate earnings mixed with economic growth skepticism.
Tune in to find out more information on multifamily dynamics during the week of February 5th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The multifamily real estate market is showing growth in traffic and improving leases. Traffic growth is led by Chicago and Charlotte, with an average increase of 0.7 tours per property nationwide. Occupancy rates are improving, and NER increases 10 basis points nationwide, expected to rise further in March. Gateway markets and secondary markets are seeing positive growth in occupancy rates.
Tune in to find out more information on multifamily dynamics during the week of January 29th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The employment market remains strong despite recent big tech layoffs. Apartment fundamentals had a positive week, with net effective rents nationwide picking up and key metrics such as traffic, leases, and available to rent improving. Nashville, Dallas, Houston, and Denver led in traffic increases, while Nashville, Denver, Jacksonville, and Phoenix were in the top 3 MSAs for new leases. The overall financial system is not overleveraged, and the upcoming economic slowdown is expected to be light and short.
Tune in to find out more information on multifamily dynamics during the week of January 22nd, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The global economy is expected to face challenges in 2023, but it is not predicted to experience a major downturn. Inflation is starting to reverse course and the Federal Reserve's interest rate increases to combat it have not yet negatively affected the employment market. The multifamily housing market has seen slight dips in occupancy and leased percentages, but traffic has increased and owners are taking advantage of lower interest rates to refinance.
Tune in to find out more information on multifamily dynamics during the week of January 15th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
Despite major tech industry layoffs, the employment market remained healthy at the end of 2022 with 223,000 jobs added in December. Wages increased and speculation suggests inflation will continue to decrease. Multifamily fundamentals were quiet, with occupancy showing signs of bottoming and NER falling slightly. The Fed's next policy meeting is on January 31st when inflation will drive rate hikes.
Tune in to find out more information on multifamily dynamics during the week of January 8th, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
As we look ahead, there will undoubtedly be challenges for the multifamily industry in the coming year. The macro-economy continues to soften driven mostly by persistent inflation and the resulting monetary tightening. For much of the past 14 years, interest rates hovered at or near zero.
Tune in to find out more information on multifamily dynamics during the week of January 1st, 2023.
This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy will end 2022 in a far different place from where it began the year. There were both expected and unexpected factors that weighed on the economy this year. Inflation began rising last year, and the Fed’s reaction to rising inflation was top of mind for many when 2022 began. True to form, inflation dominated the economic conversation all year.
Tune in to find out more information on multifamily dynamics during the week of December 18th.
This is a narration of our weekly Rent and Operating Trends Report.
As we approach the end of 2022, the last few major economic indicators will be released this week. The Consumer Price Index decelerated once again in November falling to 7.1% on an annualized basis from 7.7% in October.
Tune in to find out more information on multifamily dynamics during the week of December 11th.
This is a narration of our weekly Rent and Operating Trends Report.
Last week was a strong week for economic indicators as both the GDP and employment report exceeded analysts’ expectations. In its second estimate, GDP was revised upward to an annualized rate of 2.9% in the third quarter. The increase represents a sharp bounce back from contraction in the first two quarters of this year.
Tune in to find out more information on multifamily dynamics during the week of December 4th.
This is a narration of our weekly Rent and Operating Trends Report.
After a short and quiet Thanksgiving week, economic data releases return in full force with a number of metrics set to be shared this week. GDP and November employment data will likely dominate the headlines, but the Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, will be announced.
Tune in to find out more information on multifamily dynamics during the week of November 27th.
This is a narration of our weekly Rent and Operating Trends Report.
U.S. retail sales accelerated in October after three consecutive months of mixed results. On a seasonally adjusted basis, retail sales increased 1.3%, providing further support that the American consumer remains well capitalized and willing to spend.
Tune in to find out more information on multifamily dynamics during the week of November 13th.
This is a narration of our weekly Rent and Operating Trends Report.
The US midterm elections will result in a split congress with Democrats maintaining control of the Senate while Republicans will likely win a narrow majority in the House. As a result, I do not expect any sweeping legislation in the next two years, but as President Biden has intimated, there will hopefully be some bipartisan resolution and progress in policy making.
Tune in to find out more information on multifamily dynamics during the week of November 13th.
This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy received another positive sign last Friday, as the October jobs report once again outperformed expectations. While the overall number of new jobs added was the lowest since the end of 2020, the 261,000 new positions exceeded analyst expectations.
Tune in to find out more information on multifamily dynamics during the week of November 6th.
This is a narration of our weekly Rent and Operating Trends Report.
The US economy bounced back in the third quarter, posting growth for the first time this year. After two-quarters of negative growth, which sunk the US economy into a technical recession, GDP increased by 2.6% on an annual basis.
Tune in to find out more information on multifamily dynamics during the week of October 30th.
This is a narration of our weekly Rent and Operating Trends Report.
Inflationary pressures remain the most important topic in the U.S. economy and this week we will have a glimpse intohow higher prices are impacting consumer and corporate spending, as earnings will be released for the largest techcompanies.
Tune in to find out more information on multifamily dynamics during the week of October 23rd.
This is a narration of our weekly Rent and Operating Trends Report. The persistent inflation that has made headlines throughout 2022 refuses to subside, as the recent September price increases showed more generational growth. This time it was core CPI, a measure that removes food and energy prices, which tend to be more volatile. Core CPI increased by 6.6%, its largest annual growth in more than 40 years. Tune in to find out more information on multifamily dynamics during the week of October 16th.
This is a narration of our weekly Rent and Operating Trends Report. The employment market may finally be catching up with the rest of the economic slowdown, as the September jobs report missed estimates. While 263,000 new jobs were added to the economy, estimates called for 275,000. The unemployment rate dropped to 3.5% but the decline was due to a lower labor force participation rate, another sign of potential weakness in the job market. Employment remains the strongest aspect of the economy, but it may be losing its shine, which would align with the weakness seen across the broader market. The tech-heavy NASDAQ hit a two year low on Monday, and other major equity indices continue to trade lower. Interestingly enough, softer job growth could indicate to the Fed that their monetary tightening is working and may lead to slower interest rate increases down the road. The more significant indicator however will be the September CPI number, set to be released on Thursday. Tune in to find out more information on multifamily dynamics during the week of October 9th.
This is a narration of our weekly Rent and Operating Trends Report. The third quarter ended on a rather bleak note, as the final estimate of Q2 GDP showed negative growth once again. While we have known that the economy has been in a technical recession for some time, last week’s read serves as confirmation of the shrinking economy. And while we won’t likely see a drastic decline in growth this quarter, I anticipate another modestly negative growth rate when the first estimate of Q3 GDP is released at the end of October. All signs continue to point to a slow grind, as interest rates rise, and global demand appears to weaken. Tune in to find out more information on multifamily dynamics during the week of October 2.
This is a narration of our weekly Rent and Operating Trends Report. The U.S. economy is now firmly playing defense as additional fundamental weaknesses emerge. Major equity indices have fallen back into bear market territory, and GDP will likely remain negative when the final estimate of second quarter economic growth is released on Thursday. Job growth and consumer and corporate balance sheets remain a few of the only strengths in the economy, and as inflation persists, consumer balance sheets are getting stretched. While consumer net worth remains at near historic levels, it peaked in the first quarter of 2022 and has been falling since. With the Fed indicating additional severe rate hikes, I expect a continued economic grind for the next few quarters. Tune in to find out more information on multifamily dynamics during the week of September 25.
In today's episode we discuss growing concerns with housing affordability as rents and home prices have skyrocketed over the past two years. Are we in a housing shortage? How many apartment units will need to be built over the next 15 years to meet future demand? We are joined by NMHC's Senior Director of Research Chris Bruen, as he shares recent data from a number of studies the NMHC has done with the NAHB and other leading industry organizations.
This is a narration of our weekly Rent and Operating Trends Report. The August Consumer Price Index came in higher than anticipated despite declining energy costs in recent months. Many economists were hoping for further deceleration in overall prices, and the unexpected increase sent markets into a tailspin. As a result, the Fed is now almost certain to raise interest rates at least another 75 basis points at their meeting this week. The higher-than-expected inflation numbers will likely lead to additional 75 basis point rate increases in future meetings as well. The 10-year treasury rate has also increased, and home mortgage rates are at generational highs. The for-sale housing market has been cooling significantly, which should provide additional support to the multifamily market, at least in the short term. Tune in to find out more information on multifamily dynamics during the week of September 18.
This is a narration of our weekly Rent and Operating Trends Report. Economic volatility continues to confuse market participants as new data fails to provide a consistent message on the health of the overall economy. A robust employment market set against declining GDP and high inflation has most stock and bond analysts scratching their heads. The Fed has made it clear they will maintain significant interest rate increases, and as a result equity markets have continued their recent sell off. The S&P 500 is down roughly 4% over the past month and roughly 12% from its recent high at the end of March. Multifamily REITs have performed even worse, as most REITs are down between 5% and 10% over the past month. Tune in to find out more information on multifamily dynamics during the week of September 11.
This is a narration of our weekly Rent and Operating Trends Report. As the summer unofficially comes to a close, the U.S. economy finds itself in a similar place to where it was when the summer began. Volatility, disparity among economic indicators, and rising interest rates highlight the key aspects of the current economic landscape. And while we have focused mostly on the domestic economy, global market conditions are deteriorating even faster, especially in the Eurozone. European energy markets are in turmoil, as Russia has cut its energy supply to much of Western Europe. In the coming months we will likely see the largest economic impacts of Russia’s invasion of Ukraine, and fallout will dampen the global economy. Tune in to find out more information on multifamily dynamics during the week of September 4.
This is a narration of our weekly Rent and Operating Trends Report. While the fundamental underpinnings of the U.S. economy did not change as the result of last week’s speech from Fed Chair Jerome Powell, the remarks, and the stern and straightforward tone with which he delivered them indicates that the economy is likely in for a challenging slog. Contrary to typical Jackson Hole Economic Symposium speeches, where Fed Chair’s often discuss at lengths the different aspects of the economy, Powell’s talk was brief and only focused on the Fed’s role in reducing inflation. He laid out a course of action that will likely result in continued steep interest rate increases, and he acknowledged the need for the Fed to raise rates well above what they see as a neutral level. Powell indicated that economic activity, including employment growth may suffer as a result, but that a return to a normal inflationary environment was not only the Fed’s number one priority, but also a necessity to restabilize the economy. Tune in to find out more information on multifamily dynamics during the week of August 28.
This is a narration of our weekly Rent and Operating Trends Report. As the fall approaches, the U.S. economy continues to show signs of a slowdown, however, given the strength of the employment market, the likelihood of a soft landing is high. The price of oil retreated from its recent high in June, and if the trend continues, I expect to see inflation decline as well. All eyes will be on Jerome Powell and the Fed’s annual conference in Jackson Hole this week. Powell will speak on Friday and will likely reiterate the Fed’s support for increasing interest rates regardless of an economic recession. While this may further drive volatility in equity markets, I believe the short-term pain will be worth it, as an economic restructuring was needed. While inflation remains high, household and corporate balance sheets remain strong, unemployment is at historic lows, and on a global scale, the U.S. economy is performing comparatively well. A modest slowdown will likely continue through the remainder of this year before a new growth cycle emerges. Tune in to find out more information on multifamily dynamics during the week of August 21.
This is a narration of our weekly Rent and Operating Trends Report. July inflation came in at 8.5% on a year-over-year basis, and in a sign of the recent times, many economists and wall street analysts celebrated the lower-than-expected report. Economists had anticipated 8.7% price growth following 9.1% in June. As a result, equity markets continued to rebound from early-summer lows. The modest inflation reversal will also likely enable the Fed to continue their aggressive rate hikes, as the recent report provides evidence that higher interest rates are rippling through the economy and slowing price growth. Tune in to find out more information on multifamily dynamics during the week of August 14th.
This is a narration of our weekly Rent and Operating Trends Report. Economic optimists ended last week on a strong note, as the July employment numbers showed more than half a million new jobs added last month. New jobs were added across a variety of sectors, showing the diversity and strength of the continued employment recovery. In fact, with the significant increase in jobs created last month, the U.S. economy has now recovered all 22 million positions lost during the COVID-19 pandemic. The national unemployment rate fell to 3.5%, matching the pre-pandemic low, and wage growth accelerated, increasing 5.2% year-over-year. Tune in to find out more information on multifamily dynamics during the week of August 7.
This is a narration of our weekly Rent and Operating Trends Report. Inflationary pressures remain throughout the economy; however, a welcome sight may be emerging as oil prices appear to have stabilized around $100 per barrel. While the cost of a barrel of oil remains elevated above long-term trends, the current price reflects a decline from its peak in recent months. For the past 4 weeks, oil has remained range bound between $95 and $110 per barrel. Tune in to find out more information on multifamily dynamics during the week of June 24.
As the macro economy shifts rapidly from growth to recession, what are the main factors that will impact multifamily market. Blerim Zeqiri, CEO and Founder of Radix, joins us to share his thoughts on the current economic situation, the impact of rising interest rates, and how owners and operators can weather the economic downturn. Join us for a deep dive into the state of the multifamily industry!
This is a narration of Radix's weekly Rent and Operating Trends report. Following another increase in annual inflation, economic prospects for 2022 have dampened significantly. The annualized CPI increased 9.1% in June, the highest price jump in more than 40 years. As a result, many forecasters now believe that inflation will remain persistent for some time. According to David Solomon, CEO of Goldman Sachs, inflation is deeply embedded into our economy and volatility is likely to remain through at least the end of this year. While the job market remains strong, with nearly 400,000 new jobs added across a wide variety of sectors in June, companies are beginning to tighten hiring as the expectation of a recession increases. The Fed will likely raise short-term rates 75 or 100 basis points next week, and all signs point to additional increases until inflation begins to cool. Tune in to find out more information on multifamily during the week of July 17.
This is a narration of Radix's weekly Rent and Operating Trends Report. The U.S. economy continues to search for signs of optimism in the face of significant headwinds as we move into the third quarter. Persistent inflation has led to a swift tightening of monetary policy which has increased recession predictions from leading economists. While the short end of the treasury yield curve is increasing, yields on the long end of the curve have fallen since the last Fed meeting. The 10-year treasury rate fell below 3% last week after reaching as high as 3.5% in early June. This may be a welcome sight for borrowers looking for loans tied to the 10-year as many single-family and multifamily loans are, however, 10-year yields are falling as a result of a more pessimistic future outlook for the macroeconomy. As of July 11th, the yield curve was inverted, as the yields on one- and two-year treasuries were higher than the 10-year treasury. A yield curve inversion is often a precursor to a recession. Tune in to find out more information on multifamily dynamics during the week of July 10.
This is a narration of Radix's weekly Rent and Operating Trends Report. Equity markets recently wrapped up their worst first half of a calendar year in more than 50 years as economic turbulence remains. First quarter GDP was negative, and indicators point toward an additional decline in the second quarter, according to the widely monitored Atlanta Fed GDP now tracker. A second consecutive negative quarter of GDP growth would put the economy into a recession based on the widely used definition, however, the current economic situation has one significant difference from past recessions: the employment market. Tune in to find out more information on multifamily dynamics during the week of July 3.
This is a narration of Radix's weekly Rent and Operating Trends Report. Economic conditions remain turbulent and will likely stay that way through at least the summer months. The final estimate of first-quarter GDP will be released on Wednesday and economists expect it will remain negative. As the second quarter comes to a close, the likelihood of a recession this year increases. Consumption and travel often jump in the summer months, but this year may be different with inflation, gas prices, and airline tickets at generational highs. Aside from the traditional economic indicators including CPI, PCE, and retail sales, the quarterly earnings reports from oil companies, airlines, and major retailers should serve as a proxy for economic activity and sentiment. Industry leaders like Apple, Exxon Mobile, and United Airlines are scheduled to report earnings during the last week of July. Tune in to find out more information on multifamily dynamics during the week of June 26.
This is a narration of our weekly Rent and Operating Trends Report. The U.S. economy remains on very shaky ground as the Fed continues to tighten monetary policy quickly. Last week, the Fed increased interest rates 75 basis points, the largest single increase since 1994. As the central bank tries to curtail inflation, the multifamily industry is beginning to feel the effects of higher interest rates. Multifamily mortgage rates have increased significantly over the past 6 months, and borrowing costs now exceed cap rates for many deals. As a result, properties are staying on the market for longer, trading at lower prices, or being pulled off the market altogether. Tune in to find out more information on multifamily dynamics during the week of June 19.
This is a narration of Radix's Rent and Operating Trends report. After a brief pause in April, which led to some economists predicting a further slowdown in future prices, inflation once again reared its ugly head in May, as prices increased 8.6% annually. This marks the highest inflation rate since 1981. As a result, treasury rates have spiked once again with the ten-year treasury now yielding 3.35%. Equities have sold off across the board, and speculation is emerging that the Fed will increase interest rates 75 basis points at its June meeting. Borrowing costs for real estate investors are rising, especially on floating rate loans. Rates on bridge and construction loans tied to SOFR will likely increase for the remainder of the year. This may make deals harder to pencil in for some investors, especially newly formed investment groups or syndicators who have only raised money during the recent low-interest rate environment. Tune in to find out more information on multifamily dynamics during the week of June 12.
This is a narration of Radix's Rent and Operating Trends Report. While there is plenty of warranted speculation on the slowing economy and the potential for a recession, the employment market keeps chugging along, continuing its steady recovery with very strong job growth. Roughly 390,000 new jobs were added in May, exceeding economists’ expectations. The April jobs report was also revised to 436,000 new jobs, and the unemployment rate remained at 3.6%. Inflation and supply chain issues continue to plague the economy, but the incredibly tight employment market will likely lead to a soft landing as the economy cools. Companies across industries are still struggling to find employees at a wide variety of talent and pay scales. This will likely indicate a very shallow and short recession if we even have a recession at all. Tune in to find out more information on multifamily dynamics during the week of June 6.
This is a narration of Radix's weekly Rent and Operating Trends Report. The U.S. economy continues to adapt to a new paradigm. Easy money policies from both the Fed and Congress are behind us, inflation continues to run hot, and the rapid GDP growth that followed the COVID shutdowns has dwindled. The stock, commodity, and cryptocurrency markets may still be in for a period of volatility, but the general economy seems to have ground to a slow pace. The second estimate of first-quarter GDP and the April Personal Consumption Expenditures (PCE) index will both be released at the end of this week and will serve as barometers for the overall economy. GDP was initially estimated to have fallen in Q1. If the second estimate is also negative, we could be seeing the early stages of a recession sooner than many predicted. PCE is the preferred inflation measure of the Fed and will likely give us a good indication of what the Fed will do at its June meeting. Another month of high inflation will likely lead the Fed to a second consecutive 50 basis point increase in interest rates. Tune in to find out more information about multifamily dynamics during the week of May 22.
This is a narration of our weekly Rent and Operating Trends report. Inflation remains the metric most heavily scrutinized in today’s economy, as prices continue to rise at generationally high rates. However, April’s Consumer Price Index may have offered a slight glimmer of hope that price increases may begin to slow in the coming months. While one month is not a trend, the CPI in April decelerated for the first time since inflation worries gripped the economy last year. The Fed has taken action to fight inflation, increasing interest rates and tightening monetary policy. While some, including former Fed Chair Ben Bernanke, have criticized the Fed for its delayed response to inflation, it appears that Jay Powell’s Fed will continue to increase rates until price increases have slowed significantly. Ahead of the upcoming mid-term elections, inflation will be one of the biggest topics on voters minds. Tune in to find out more information on multifamily dynamics during the week of May 15th.
This is a narration of our weekly Rent and Operating Trends Report. After a highly volatile April, the economy remained turbulent at the beginning of May. High inflation led the Fed to increase interest rates by 50 basis points, which resulted in major sell-offs across the equity market. The Fed will likely continue tightening monetary policy despite the declining financial markets until inflation is brought back into a more normal range. While the stock market is making headlines, the employment market continues its strong growth, as roughly 428,000 new jobs were gained in April. Jobs were added across every major sector last month, and the unemployment rate of 3.6% indicates that the job market has returned to pre-COVID levels. If the employment market remains strong and inflation runs hot, the Fed will continue raising interest rates, which will likely lead to continued volatility in the stock market. Large funds may begin re-evaluating their allocations to different investment sectors, and given the recent strength and stability of multifamily, it would not surprise me to see additional inflows of institutional capital into our sector. Tune in to find out more information on multifamily dynamics during the week of May 8th.
This is a narration of our weekly Rent and Operating Trends report. Recession fears increased last week as the economy unexpectedly contracted in the first quarter. GDP fell 1.4%, marking the first economic decline since the COVID-19 pandemic began. Most economists will define a recession after two consecutive negative quarters, and there is a chance that Q1 GDP may yet be revised upward, however, the surprising drop adds to the economic turmoil in April. Inflation continues to run high, and the Fed is expected to raise interest rates 50 basis points at their policy meeting this week. That would mark the largest single interest rate increase from the Fed since before the Great Financial Crisis. In anticipation of higher short-term rates and as the result of continued price increases, the 10-year treasury rate eclipsed three percent on Monday for the first time since 2018. Tune in to find out more information on multifamily dynamics during the week of May 1st.
This is a narration of our weekly Rent and Operating Trends Report. All eyes on Wall Street this week are focused on big tech earnings, as companies like Apple and Amazon report for the first time since interest rates spiked. The Fed has made it clear it will raise interest rates rapidly to curb inflation. While interest rate hikes may not have a direct impact on consumer spending, the knock-on effects of a slower economy should eventually impact the tech giants. This week’s earnings may be the first glimpse we get into that slowdown. Tune in to find out more information on multifamily dynamics during the week of April 24th.