Rent Growth Slows as Additional Multifamily Units are Completed

New data from Zillow released on Monday revealed that more property managers offered concessions on their rentals in July as rent growth slowed. Zillow says that the post-pandemic construction frenzy continues to help soften rent growth. More new multifamily units were completed in June than in any month since the 1970s, with almost 60,000 multifamily units completed nationwide during the month.

The share of rental listings on Zillow offering a concession—a sweetener such as free weeks of rent or free parking—climbed to 33.2% in July. That’s up slightly from 33% in June and 25.4% a year earlier.

According to Zillow, the past two years have been fairly friendly for apartment renters. While multifamily rents are still rising, up 5.1% since July 2022, that pace is in line with historic norms and welcome relief for renters after an astounding 22.3% increase in the previous two years. Monthly rent growth for multifamily units slowed in July for the second month in a row.

In addition, renters have enjoyed concessions more often during the past two years. The share of rental listings on Zillow offering at least one concession was at a 29-month low of 19.4% in July 2022. That share has climbed considerably since then, peaking at 33.6% in April.

In background and analysis accompanying the report, Zillow Chief Economist Skylar Olsen said:

“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. 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. Rents are still growing, but it’s a far cry from the steep rent hikes of two or three years ago, and renters will find sweeteners being offered by more than half of rentals in some places. A slowing job market and lower mortgage rates could mean falling rents if the current trends hold.”