Apartments rents are on the rise again.
“The apartment market’s performance during the third quarter slightly surpassed expectations,” according to Greg Willett, chief economist for RealPage Inc., a provider of property management software and services.
Demand for apartment units softened slightly in recent years, as developers built thousands of new apartments. Now, demand is growing quickly once again, as the number of new households rises quickly and helps fill new units. This improved outlook comes after years of already strong rent growth and low vacancy rates.
“We are living in a very dull bliss,” says John Sebree, first vice president and national director with the national multi housing group at brokerage firm Marcus & Millichap. “The fundamentals are very strong. They continue to be very strong.”
Apartment rents in the U.S. grew by an average of 2.9 percent over the 12 months that ended in the third quarter, according to RealPage. That’s up from 2.5 percent in the second quarter. The faster increase at least briefly reversed a pattern of slowing rent increases recorded since late 2015, according to Willett.
Rents have grown more slowly as developers have been opening new luxury apartments at a rate of 300,000 to 325,000 a year since late 2016. Developers are on track to keep opening new units at that frantic pace at least through the end of 2019, according to RealPage.