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  • Writer's pictureRealFacts Editorial Team

Steady Demand Keeps U.S. Apartment Occupancy Strong Amid Record Supply


Apartments

The U.S. apartment market continues to show great strength as both occupancy and rent change fundamentals essentially held steady in May. Occupancy for U.S. apartments held in-line with readings seen throughout 2024 to stand at 94.2% in May, according to data from RealPage Market Analytics. 


For seven straight months, occupancy has remained at or above 94.1%, supporting the idea that the nation has reached a point of stabilization. Though May’s occupancy of 94.2% was static month-over-month and therefore underperformed typical expectations, the broader idea that occupancy has found its level amid a 40-plus year high supply wave remains a testament to the depth of the nation’s demand for apartments. 


The unchanged occupancy rate during a time when the supply of apartments is very high indicates that renters are continuing to absorb the new units being constructed at a great rate nationwide. For 17 ongoing months, the needle on occupancy hasn’t moved more than 10 basis points in either direction staying almost stationary. 


In May 2024, eight of the nation’s 50 largest markets, including Richmond, West Palm Beach, San Francisco, Las Vegas, Detroit, Greensboro/Winston-Salem, Sacramento, and San Jose, saw year-over-year increases in occupancy rates, a notable improvement from just two markets (Minneapolis and San Francisco) at the start of the year. However, several Sun Belt apartment markets, particularly the major Texas markets of Dallas, Fort Worth, Houston, Austin, and San Antonio, continued to struggle with lower occupancy rates below 93% amid record supply rates.



Apartment Market Fundamentals

In May 2023, effective asking rents for professionally managed apartments increased by just 0.2% year-over-year, indicating muted annualized rent change. However, on a monthly basis, rents grew by 0.5%, showing a more typical seasonal pattern and marking the highest monthly increase since June 2023. This monthly growth contrasts with the steady annual rent change of 0.1% to 0.3% over the past eight months, a result of significant rent cuts in late 2023.


Even the top-performing markets, such as Milwaukee, Washington, DC, Kansas City, Cincinnati, and Greensboro/Winston-Salem, saw less than 4% annual rent growth, a stark difference from the double-digit increases of 2022. Only five of the 50 largest markets experienced rent growth of 3.0% or more by May 2024, the fewest since July 2020.


Apartment Rent Growth

Almost half of the largest 50 apartment markets in the nation (23 of 50) recorded rent cuts on an annual basis in May. Among all of the major markets, Austin recorded the largest rent cuts with a cut of 7.1% in May. Jacksonville, Atlanta, San Antonio, and Raleigh/Durham also all posted rent cuts deeper than 4%.


Apartment Rent Change

Despite some of the largest markets recording rent cuts, nearly all (45 of 50) markets posted some level of rent growth, indicating that the deepest rent cuts are likely in the past. The only five major markets that posted rent cuts on a monthly basis in May were Tampa, Atlanta, Phoenix, Salt Lake City and Miami. This suggests that while a few markets still face challenges, the overall trend points towards stabilization and recovery in the apartment market.

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