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  • Writer's pictureRealFacts Editorial Team

Multifamily Market Update: Northeast and Midwest Lead Rent Growth as Sun Belt Struggles

multifamily housing

In a mixed performance for the multifamily sector, the latest Yardi Matrix Multifamily National Report highlights significant regional disparities in rent growth and occupancy rates across the United States. While the national average multifamily rent saw a modest increase of $6 in May, bringing it to a record-high of $1,733, the performance varied widely among different metro areas.

Chart of YOY rent growth by city

Rising Stars: Northeast and Midwest Markets

The Northeast and Midwest regions are currently leading the charge in rent growth. New York City tops the list with an impressive year-over-year (YOY) rent growth of 4.8%, marking a 0.2 percentage point increase from April. This robust growth in New York City reflects a strong demand for rental units, driven by a confluence of factors including job growth, high mortgage rates, and sustained immigration.

Following closely is Columbus, Ohio, which, despite a slight dip of 0.2 percentage points from the previous month, still boasts a solid 3.6% YOY rent growth. Kansas City, Missouri, has also shown significant improvement, jumping from 2.9% in April to 3.4% in May, highlighting its emerging status as a desirable rental market.

Other notable performers include New Jersey and Washington, D.C., both exhibiting stable growth at 3.4% and 3.0%, respectively. The consistent performance of these markets underscores the resilience of rental demand in these areas, supported by strong economic fundamentals and a steady influx of new residents.

The Sun Belt Struggles: Oversupply and Falling Occupancy

In stark contrast, many Sun Belt metros are grappling with declining rent growth and falling occupancy rates. Cities such as Atlanta, Phoenix, and Austin, Texas, are at the bottom of the Top 30 markets, with rent growth at or below -1.5%. This trend is largely driven by an oversupply of rental units, as these high-growth markets have seen substantial new deliveries that outpace demand.

The high supply levels are expected to continue suppressing rent growth in the Sun Belt through the end of 2025. Despite strong absorption rates, cities like Dallas, Houston, Austin, and Atlanta are experiencing occupancy rates falling below 93%, a significant drop that reflects the challenges these markets face in balancing supply and demand.

A Mixed Bag: National Trends and Economic Influences

Overall, the multifamily market is experiencing a normal seasonal pattern of rent increases, but the large delivery pipelines in certain markets are exerting downward pressure on rents. The national average rent increase of $6 in May marks a return to record-high levels, yet year-over-year rent growth remains unchanged at 0.6% for the second consecutive month.

The single-family rental market also saw a $6 increase from April to May, bringing the average rent to $2,166. Although YOY single-family rent growth fell by 10 basis points, it still outperforms the multifamily sector with a growth rate of 1.4%. However, occupancy rates in the single-family rental market fell by 10 basis points to 95.3%.

Economic conditions continue to play a crucial role in shaping the multifamily market. The addition of 2.8 million jobs over the past year, combined with high mortgage rates, is keeping many potential first-time homebuyers in the rental market. However, high inflation and interest rates pose significant challenges, with sales activity falling 20% YOY and property owners facing high refinancing costs.

The Outlook: Navigating a Complex Landscape

As the multifamily sector navigates this complex landscape, market performance varies widely across regions. The Northeast and Midwest are currently leading in rent growth, driven by strong demand and economic resilience. In contrast, the Sun Belt markets face challenges from oversupply and falling occupancy rates, highlighting the importance of regional dynamics in the multifamily market.

Moving forward, market participants will need to closely monitor these trends and adapt their strategies to navigate the evolving conditions. While the national market presents a mixed picture, opportunities remain for those who can effectively leverage the strengths of the high-performing regions and address the challenges in oversupplied markets.


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