Average U.S. multifamily rents rose slightly in March by $4 to $1,371/month, according to the most recent Yardi Matrix Multifamily Monthly report.

That might not sound like much, but average rents nationwide have been essentially stagnant since July 2017, Yardi reports, not moving more than $1 in either direction since then.

U.S. multifamily rental growth year-over-year in March came in at 2.5%, which represents a slide in the rate of growth. Rental growth has decelerated since the most recent peak in annual growth of 5.4% in early 2016.

"Rent growth in many metros has decelerated to moderate levels over the last 12 to 18 months," Yardi Associate Director of Research Paul Fiorilla said.

"Yardi found that markets in which rents decelerated the most in 2017 had declining occupancy rates, either because of rapid supply increases or a leveling of job and population growth that had the effect of cooling demand."

Even so, rents are up for the year in some hot markets. Orlando led the nation for the second consecutive month of year-over-year rent growth in March (up 7%), while other warm-climate metros such as Las Vegas (up 5.2%), the Inland Empire (up 4.4%) and Phoenix (up 4.3%) all performed well.

After topping Yardi's rankings for the last two years, Sacramento was No. 2 in rent growth for the second consecutive month, having experienced a 6.4% increase in rental rates since last year.

Rents declined in other warm-weather markets such as Raleigh, San Antonio and Austin, as new construction impacted occupancy. Austin’s multifamily occupancy, for instance, fell 0.7% (70 basis points) over the past 12 months, while San Antonio (down 1.3%) and Raleigh (down 1.2%) saw more drastic declines.

Nationwide, according to Yardi, about 620,000 units have been added to total stock over the last two years, resulting in a 1% (100 basis point) drop in U.S. apartment occupancy.

Deliveries nationwide are expected to hit a cyclical peak of 360,000 new units this year, according to Yardi data. As a result, occupancy will continue its steady downward movement. Occupancy has already declined in all but one of the top 30 markets over the last 12 months, with Houston being the lone exception.

"The other major drag on rent growth is affordability," Fiorilla said. "Rapid rent gains have put lifestyle units out of reach for middle-class households in some high-cost submarkets, and rents will flatten in those areas until that dynamic changes."

Still, outsized job growth, especially in warm-weather markets, supports long-term apartment fundamentals.

"We believe that most U.S. metros will achieve moderate to strong rent growth over the next couple of years," Fiorilla said. "Demand drivers — such as growth of millennial households, downsizing of the baby boomer generation and the healthy job market — remain favorable, while occupancy rates continue to hold above the historical average."