SEATTLE, WA — The rental market is experiencing a significant shift, with more new multifamily units completed in June than in any month in the past 50 years. This surge in construction is providing much-needed relief for renters as the pace of rent growth slows, according to new data from Zillow®.
The share of rental listings offering concessions, such as free weeks of rent or complimentary parking, increased to 33.2% in July. This is a slight rise from 33% in June and a notable jump from 25.4% a year earlier. These incentives are becoming more common, especially in cities like Raleigh, Charlotte, and Atlanta, where over half of rentals are offering concessions.
“Builders have stepped up and built an incredible number of homes in response to soaring rents during the pandemic, and renters are now seeing the benefits,” said Zillow Chief Economist Skylar Olsen. “Now is a great time for renters to find a deal, with more new apartments hitting the market than at any time in the past several decades.”
The rental market has been relatively favorable for apartment renters over the past two years. While multifamily rents are still increasing, up 5.1% since July 2022, this growth is in line with historic norms and is a welcome change after the staggering 22.3% rise in the previous two years. Monthly rent growth for multifamily units also slowed in July for the second consecutive month.
Renters have been enjoying more concessions over the past two years. The share of rental listings on Zillow offering at least one concession was at a 29-month low in July 2022 at 19.4%. This share has climbed significantly since then, peaking at 33.6% in April.
More than half of rental listings on Zillow are offering a concession in six major metro areas: Raleigh (53.3%), Charlotte (53%), Atlanta (52.2%), Salt Lake City (50.9%), Nashville (50.8%), and Austin (50.5%). Conversely, four major metros have a smaller share of listings with a concession than last year, indicating a more competitive rental market in those areas. These metros include San Jose (-9.7 percentage points), Baltimore (-5.6), Milwaukee (-1.8), and Pittsburgh (-0.2).
A key reason for the rental market cooldown is the multifamily construction boom, which is creating new rental options and rebalancing the supply and demand equation. Nearly 60,000 multifamily units were completed nationwide in June, marking the highest number in half a century.
While the supply boom is still ongoing, it may have reached its peak. The number of multifamily units under construction remains high but has decreased for eight consecutive months. Before this recent surge, 1973 was the last time this many units were being built.
The rental vacancy rate, another measure of market tightness, held steady at 6.6% in the second quarter of this year, where it has remained for the past four quarterly readings. This is the highest rate since winter 2021.
The current trends suggest that renters will continue to benefit from a more balanced market. If the slowing job market and lower mortgage rates persist, we could see rents fall further, providing even more opportunities for renters to find deals and concessions.
As the market evolves, renters should stay informed about new developments and be prepared to take advantage of the increasing availability of rental units and the growing trend of concessions. The future looks promising for renters seeking better deals and more favorable rental terms.
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