Apartment rents are on the verge of declining due to massive new supply

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Apartment rents have been cooling off sharply for several months, and they look like they’re about to go negative compared with a year ago.

Rents in August were just 0.28% higher than August 2022, according to real estate tech platform RealPage. Compare that to a year ago, when rents were posting 11% annual growth. With the exception of a very brief drop during the Covid lockdowns, rents have not shown negative annual growth in well over a decade. When they did, it was due to a recession hitting demand.

That is not the case now. Apartment occupancies nationally are at a pretty healthy 94%, which is right along historical norms. High mortgage rates combined with high home prices and tight supply have kept more would-be buyers in the rental market. The issue instead is just a massive amount of apartment supply.

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