According to a new report from the CoStar Group, national year-over-year rent growth was 9.2% in the second quarter of 2022, compared to 11.4% in the first quarter.
WASHINGTON–(BUSINESS WIRE)–Today, the CoStar Group released the findings of its second quarter report on rent growth in the United States. According to the national study, while demand is up 9.2% year-over-year, that figure is down from 11.4% at the end of the first quarter. These results mark a continued downward trend in rental growth, which is now the third consecutive quarter of declining demand. The report also revealed that the vacancy rate rose 10 basis points to 5% nationally.
“The moderation in rent growth in the second quarter is directly related to the lackluster demand we’ve seen over the past 90 days,” said Jay Lybik, country manager of Multifamily Analytics, CoStar Group. “Combine the fact that rental prices continue to be at record highs with subdued consumer demand and a record 450,000 units expected to be delivered by the end of the year, and you have a perfect recipe. for a sharp increase in vacancy rates over the next 6 months.”
Growth in the Sunbelt and the South is also slowing, but still above the national average
While national multifamily rental growth is mostly slowing across the nation, regardless of city, the Sunbelt and South continued to outpace the national average, with the former holding 4 spots in the top 10 markets. Cities in Florida and Texas posted year-over-year rent growth at least 4 percentage points faster than the rest of the country, led by Orlando, which saw the strongest rent growth year-over-year in the country in the second quarter at 18.7%, more than double the average.
Underperforming absorption in 2022
CoStar’s report also looked at the more pressing issue of quarterly absorption rates dating back to 2018. Over the past three quarters, absorption has remained in the 60,000 unit range, well below record totals posted last year, but also below average compared to the period pre-pandemic figures. This is an especially remarkable stat given that historically, Q2 sees the highest absorption totals of the year.
Rents at record highs and the tight vacancy rate have dampened demand slightly, as potential household formations can no longer afford or find an available apartment to rent. However, rising inflation and growing economic uncertainty gripping the country throughout 2022 have had a greater negative impact on multifamily demand. These factors have pushed consumer confidence to record highs despite job growth averaging nearly 500,000 jobs per month to date and unemployment sitting at just 3.6%.
About CoStar Group
CoStar Group, Inc. (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information and analysis. Founded in 1987, CoStar conducts extensive and ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services allows clients to analyze, interpret and gain unparalleled insight into commercial property values, market conditions and current availability. STR provides premium benchmarking data, analysis and market insights for the global hospitality industry. Ten-X provides a leading platform for conducting online auctions and negotiated offers for commercial real estate. LoopNet is the busiest online marketplace for commercial real estate. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters looking for superb apartments and provide property managers and owners with a proven platform for marketing their properties. Homesnap is a leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and strengthen the agent-client relationship. Homes.com provides residential property advertising and marketing services to real estate professionals. Realla is the UK’s most comprehensive digital commercial property marketplace. BureauxLocaux is one of the largest real estate portals specializing in the purchase and rental of business real estate in France. CoStar Group websites attract tens of millions of unique visitors per month. Based in Washington, DC, CoStar Group has offices in the United States, Europe, Canada and Asia. From time to time, we plan to use our corporate website, http://www.costargroup.com, as a distribution channel for important company information. For more information, visit www.costargroup.com.
This press release contains “forward-looking statements,” including, without limitation, statements regarding CoStar’s expectations, beliefs, intentions or strategies regarding the future. These statements are based on current beliefs and are subject to numerous risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such variations: the risk that the number of units to be delivered by the end of the fiscal year is not as expected; and the risk that vacancy rates will not increase as expected. Further information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those set forth in documents filed by CoStar from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, each filed with of the SEC, including in the “Risk Factors” section of these filings, as well as CoStar’s other filings with the SEC available on the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar as of the date hereof, and CoStar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.