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U.S. Apartment Rents and Occupancy Soar in June

U.S. Apartment Rents and Occupancy Soar in June

With apartment shortages seen across much of the country, rents are climbing at the fastest pace seen in decades.

Effective asking rents jumped 2% just in the month of June, driving up prices 6.3% year-over-year. That annual rent growth is the biggest 12-month hike recorded since early 2001.

The country’s average monthly rent has reached $1,513, topping the $1,500 mark for the first time ever.

Pushing rents upward, occupancy is now is in line with the early 2000s all-time highs. Today’s rate is at 96.5%, a figure last registered in the last half of calendar 2000.

Big Rent Growth Is Widespread

Annual growth in effective asking rents comes in at more than 10% in 53 of the country’s 150 largest metros, including 13 spots where year-over-year price increases are at 15% or more.

Relatively small Boise, ID posts the most aggressive annual rent growth in that 150-metro group of markets, with pricing there up 21.2%.

Looking specifically at bigger places with at least 100,000 apartment units, Phoenix registers 19.2% annual rent growth, and Las Vegas rents are up 16.7%. Other big markets recording yearly price increases that top 15% are West Palm Beach, Riverside/San Bernardino and Tampa.

Annual rent growth is at 14% to 15% across Atlanta, Jacksonville and Sacramento, while Salt Lake City and Fort Lauderdale register increases in the range of 12% to 13%.

Completing the list of big metros with annual rent growth of at least 10% are another half-dozen markets: Greensboro/Winston-Salem, Memphis, Austin, Charlotte, Raleigh/Durham and Orlando.

June’s effective asking rents are down from year-earlier levels in only five of the country’s 150 largest metros.

Relatively small Midland/Odessa, TX registers a price change of -12.9%, reflecting that energy production in the West Texas Oil Patch remains far below earlier levels.

While apartment pricing is moving up on a month-to-month basis in the country’s key gateway metros, rents still aren’t back to year-ago levels in four of them. Annual change in effective asking rents is at -11% in San Francisco, -8.4% in New York and -6.6% in San Jose. While Seattle should move into annual rent growth mode in July, the figure was still technically negative as of June at -0.3%.

Small Metros Are Occupancy Leaders

Small markets dominate the list of the country’s apartment occupancy leaders, in part because there’s so little construction activity in these locations.

Occupancy reaches 99% or better in a trio of small-metro locations: Salisbury, MD in the Eastern Shore cluster of small towns with fishing, farming and tourism-focused economies, as well as Bakersfield, CA and Allentown, PA.

With occupancy at 98.5%, Riverside/San Bernardino is the only comparatively large metro that records occupancy in line with the rates in small-metro occupancy leaders.

Only a handful of spots register less-than-full occupancy rates.

Again, Midland/Odessa continues to struggle notably, with occupancy at only 88.3%.

Looking specifically at the bigger metros, the performance in San Francisco remains well below normal, as occupancy is at just 94.1%. Houston and San Antonio, also post mediocre occupancy results. The rates are at 94.1% in Houston and 94.5% in San Antonio.