Houston Becomes Latest Market with Positive Rent Growth - RAOT Week of Sep 29th 2024

This is a narration of our weekly Rent and Operating Trends Report.

Fed Chair Jerome Powell Gives Positive Outlook

Speaking to attendees at the National Association of Business Economics annual meeting, the Fed’s leader provided an optimistic view of current economic conditions. While acknowledging that the labor market has cooled from an unsustainable pace, Powell also noted a relatively low unemployment rate and a high labor force participation rate for prime-age workers. 

He stated that the Fed does not need to see further cooling in the labor market, which is likely a good sign for future interest rate cuts. Overall, he described the economy as being in “solid shape” as we head into the fourth quarter.

Inflation Continues to Head in Right Direction

The personal consumption expenditures index (PCE), the Fed’s preferred measure of inflation, showed prices were up 2.2% in August. It was down from 2.5% in July and trending closer to the Fed’s target rate of 2.0%. 

It was another favorable report released about the economy in line with a soft landing. In recent weeks, initial unemployment insurance claims have trended lower, consumer spending increased, and the latest GDP estimate was stronger than expected. 

New Jobs Report on Friday

The Bureau of Labor Statistics will release its monthly U.S. jobs report on Friday. Consensus expectations are currently close to 150,000 jobs added for September, similar to August’s total. The unemployment rate is likely to have a slight uptick from the prior month. 

Two of the main themes that have persisted in recent reports have been downward revisions to prior job growth estimates, as well as lack of employment growth in the private sector. 

U.S. Multifamily Performance

Recent notable trends for rent growth and traffic continued in the latest Radix report. As of last week, effective rents were down 0.5% from the prior year, but the rate has incrementally improved from an operator’s perspective in the past several weeks. Houston became the latest major market to post positive annual rent growth, just as supply is poised to decline significantly in the market next year.

Traffic, the number of new leases signed, and the occupancy rate for the U.S. all ticked down due to seasonality. The latest week’s traffic count per property in the U.S. was the lowest since the initial onset of the pandemic. The average occupancy rate for the U.S. is still at 93.7%, but the lower traffic counts are especially concerning for markets or properties with high vacancy rates heading into the fall and winter seasons.

Explore our webpage for more insights and resources:
https://bit.ly/Radix_Website

Explore our webpage for more insights and resources:
https://bit.ly/Radix_Website