Moderate Rent Growth in the Forecast for U.S. Multifamily

Although multifamily fundamentals remained healthy through the first half of the year, doubts abound over the impact of interest rates on the economy and capital markets, Yardi Matrix said Wednesday in its latest report on the sector.  

“Demand is holding up, fueled by ongoing robust job growth and strong consumer balance sheets,” according to the report. “Yet the capital side of the industry is facing significant headwinds from higher mortgage rates.” 

Longer-term, Yardi Matrix analysts said they expect moderate 2.5% rent growth nationwide this year. The gains will be concentrated in the more moderately priced “Renter-by-Necessity” segment, “since affordability is a growing problem and new deliveries are focused on high-end Lifestyle units.”  

New deliveries will be high through at least the end of 2024, Yardi Matrix said. However, starts are gradually declining “because debt is more expensive and fewer banks are financing construction,” according to the report.