U.S. Apartment Prices Fall for Third Straight Month Amid Easing Occupancy

The U.S. apartment market recorded a third consecutive month of annual rent cuts in October, signaling a persistent trend after several years of growth.

Price declines across the U.S. were inspired by easing occupancy rates. U.S. apartment occupancy fell for a third consecutive month, dipping to 94.9% in October, according to data from RealPage Market Analytics. U.S. occupancy was 20 basis points (bps) below the September showing and down 60 bps in the past three months. However, year-over-year, occupancy was still up 10 bps.

As occupancy faded, effective asking rent cuts intensified in the past few months. Prices fell 0.7% year-over-year across the U.S. as of October. This was the nation’s deepest annual rent cut since March 2021.

Rent positioning was weighed down by South and West region markets recently, while tech hubs saw a rebound. 

Pricing Weakness Continues in South and West Region Markets

Major South and West region markets continued to see some of the deepest rent cuts nationwide in the past year. The South has experienced significant supply growth over the past few years, prompting operators to adopt a more cautious approach. In fact, the South has not recorded any annual rent growth since mid-2023. Meanwhile, the West region also saw rent reductions intensify in October, further dragging on the overall national performance.

Supply-heavy areas like Denver, Austin, Phoenix and Charlotte were some of the hardest-hit, with rent cuts persisting despite solid apartment demand.

Other markets that continued to see deep rent cuts were tourism-dependent markets such as Orlando and Nashville. Softness in markets that rely on tourism can be an early sign of economic weakness as consumers tighten discretionary spending on travel. Of note, Las Vegas and Tampa just missed a bottom tier performance, with rent cuts of 3% in the past year.

Tech Markets See Sizable Rent Growth

On the other hand, renewed apartment demand in tech-heavy coastal markets – fueled in part by optimism surrounding artificial intelligence – is boosting rent growth in San Francisco, San Jose and New York. These markets continued to rank among the largest 50 apartment markets with the most rent growth, with prices climbing 3% to 7% in the year-ending October.

Other markets with big rent growth in the past year included Chicago, Pittsburgh, Virginia Beach and Minneapolis.