An Update on Rent Growth

Jordan Brooks
May 9, 2023

An Update on Rent Growth

By Jordan Brooks

After a tough winter for multifamily, the industry has come out the other side and now finds itself squarely within the spring and summer months. This portion of the calendar is typically a stronger one for apartment demand and for rent growth. Net absorption, while still low compared to historic norms, nonetheless improved in both March and April after spending seven consecutive months in negative territory. Much was made during the winter about the sharp downward move in rent growth and it continues to be a common topic of discussion.

All numbers will refer to conventional properties of at least fifty units.

Taking a Step Back

Before having a look at rent performance in the last few months and what might be expected through the remainder of 2023, it is helpful to take a step back and add some context to the current moment.


In the end, following a period of enormous rent growth and during the weaker portion of the calendar, national average effective rent for new leases gained 0.6% in the eight months since the cool down began. What is more, roughly 25,000 net leased units were shed in that same period. In other words, rent growth has undeniably been hard to come by in recent months, but the situation has hardly been a crisis.

In the first four months of 2023, the national average effective rent has gained 0.8%.


Despite some markets being in the category, average effective rent declines have not been the rule so far this year. Only nineteen ALN markets ended April with a lower average than they entered the year with – representing 13% of national markets. Almost one hundred markets have exceeded the national gain of 0.8% in the period.

Headwinds for 2023 Rent Growth

However, headwinds aside from stubbornly low demand remain for rent growth. The new construction pipeline is expected to deliver more new units than last year’s 400,000.


The rent growth of 2021 and the first half of 2022 was astounding, and it lasted longer than the demand data would have indicated. The subsequent cool down happened rapidly. A monthly gain of 1% in July turned to a 0.2% gain just two months later. And yet, the bottom in the winter period, even as the nation was shedding net leased units, turned out to be a 0.3% decline in both November and December. 2023 is already back in positive territory.
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