The divergence in single-family and multifamily rent growth, as told by one chart

There has been a lot of media attention paid to the cooling rental market. While these articles are correct in noting the softening of multifamily rent growth, with some boomtowns like Austin and San Antonio experiencing outright rent declines, they often overlook a significant aspect: In most markets, rents continue to rise, and, notably, single-family rent growth remains elevated.

That divergence between single-family and multifamily rent growth is something ResiClub has been covering for months.

According to the Zillow Observed Rent Index (ZORI), national single-family rents rose +5.0% between March 2023 and March 2024, while multifamily rents rose +2.7%.

While national rents are still rising, they have decelerated significantly since the peak of the Pandemic Housing Boom, when year-over-year single-family rent growth topped +13.4% in March 2022 and year-over-year multifamily rent growth peaked at +16.3% in February 2022.

Why is the multifamily market seeing more softness than the single-family rental market?

A major reason is that many housing markets are experiencing a wave of multifamily completions, which were financed during the period of ultralow interest rates and are now coming online. In 2023, the U.S. witnessed a surge in apartment supply, reaching the highest levels since 1987, with over 439,000 units completing construction, according to RealPage.

A lot more apartment/multifamily supply is coming in 2024.

According to the latest forecast from RealPage, a property management software company in the multifamily sector, 671,953 U.S. apartment units are projected to be completed in 2024. This would represent the highest level since 1974, the year of Richard Nixon's resignation.

Sunbelt boom markets, like Austin, where the most supply is coming online, are also the very places where multifamily rents are falling.

Later this week, ResiClub PRO members (paid tier) will get a deep look at single-family and multifamily rents down to a market level.

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