U.S. Apartment Performance Holds Steady in February

The U.S. apartment market continued to hold steady in February as occupancy remained tight and rent growth hovered around 3%.

National apartment occupancy in February remained at 95.5%, matching January’s rate. Though marginally softer than the decades-long high of 96.3% achieved in August, February’s rate still outpaces year-ago figures by 30 basis points (bps).

Rent growth in February averaged 2.9% annually across the U.S. That rate sits a bit below the 3.2% seen in February 2019 but matches the three-year average.

Steady performance has been a key theme for the U.S. apartment market in recent years. However, as the rising number of coronavirus cases in the U.S. prompt economic concerns, potential impacts to the multifamily market remain unclear.

Continuing a months-long trend of strong occupancy, only seven of the nation’s 50 largest apartment markets experienced softening occupancy from year-ago levels. In most of those markets, softening was modest at 30 bps or less. Only Minneapolis/St. Paul saw a steeper decline, of 40 bps.

Among markets where occupancy increased, many of the largest increases were in Midwest markets such as St. Louis (120 bps), Indianapolis (100 bps) and Kansas City (70 bps).

All four regions of the country experienced strengthening occupancy over the past year.

After shuffling around for the first time in several months in January, the rent growth leaderboard again has some newcomers in February. Austin, San Diego and Charlotte fell out of the top 10, making room for Memphis, Sacramento and Cincinnati. Nashville – which took the #2 spot in January – slipped a couple pegs to #4 in February.

Several markets that had been faltering a year ago rebounded recently. Four markets saw rent growth accelerate by 100 bps or more from February 2019, including St. Louis (280 bps), Seattle (200 bps), Anaheim (180 bps) and Philadelphia (110 bps).

Alternatively, Las Vegas and Atlanta lost 300 bps or more of rent growth over the past year. Sixteen others lost 100 bps or more, including many in California.