REPORT: Apartments In Sun Belt Markets Set Up For 'Significant Collapse Of Demand'

Aerial view of Palm Beach, Florida
Palm Beach, Florida

Rent growth is slowing considerably around the country, especially in some of the Sun Belt markets that were once scorching-hot, a new report shows.

For the first time since 2020, 12 markets experienced a drop in asking rents over the course of a month, according to a report released Wednesday by CoStar-owned Apartments.com.

The markets that experienced month-over-month rent declines in July included Miami with a 0.5% drop, Phoenix with a 0.4% drop and Dallas-Fort Worth with a 0.2% drop.

Beyond the markets where rents are falling, other hot markets are seeing a slowdown in their pace of rent growth. Though Sun Belt markets still occupy eight of the top 10 spots for growth, many have seen that growth percentage decline by double digits since last year, per the Apartments.com report.

In Palm Beach, Florida, for instance, rent growth peaked at 30.6% in the fourth quarter of last year. By the end of July, growth was at 12.7%, per the report.

"While multifamily yearly rents continued to perform well above historical averages, the deceleration of rent growth quickened at a time when markets typically post their best results,” Jay Lybik, national director of multifamily analytics at CoStar Group, said in a statement. "The deteriorating rent situation highlights a significant collapse of demand in the sector when new unit deliveries are projected to hit 230,000 in the second half of 2022."

Though Florida is home to four of the five top markets for rent growth, it's not the only place seeing signs of a slowdown: Las Vegas rent growth also declined by double digits.

There were some markets that performed better. In San Francisco, average rents rose 40 basis points over the past month, nearing the market's all-time peak. The East Bay in California also didn't see a decline in rent growth.

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