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From Titan Funds

U.S. home sales drop to two-year low: U.S. existing home sales declined for the 5th straight month and the lowest in two years in June as a swell in borrowing costs tamps down demand. The news follows data that mortgage applications are at the lowest since 2000. Mortgage rates will likely continue to rise as the Fed continues its aggressive posture of rate hikes to combat inflation. 

Titan’s Takeaway: One unintended consequence of a slowing housing market: sky-high rents. With more potential home-buyers backing out of deals, the rental market is flooded with new applicants, driving rental prices to record highs. 

To support the above data, see below.

Multifamily Rents Rise Again in June, Yardi Matrix Reports

Average U.S. asking rent increased by $19 last month, reaching new high of $1,706

Average U.S. multifamily rents rose another $19 in June to edge over $1,700 for the first time ever, according to the latest Yardi® Matrix Multifamily Report.

The increase was fueled by strong demand and rent growth throughout the country. Rent growth increased at least 10 percent year-over-year in 25 of Yardi’s top 30 metros. National occupancy rates were solid at 96 percent.

On a year-over-year basis, growth continues to slow down. In June, it decelerated by 50 basis points to 13.7 percent. That’s 130 basis points off the February peak of 15.2 percent.

Rents in the single-family build-to-rent (BTR) sector continue to grow as well. The average single-family BTR asking rent increased by $23 in June to an all-time high of $2,071. Year-over-year growth dropped by 90 basis points to 11.8 percent.

“The multifamily market is starting to show signs of deceleration in June but is still performing at extremely high levels. Year-over-year rent growth was down 50 basis points from May. While rent growth in 2022 is still higher than any previous year on record, it is the fourth month in a row year-over-year rent growth declined,” note Matrix analysts.

The expectation for the remainder of 2022 is for rents to increase at slower rates as the economy cools off. “Inflation rates will take a while to ebb, causing consumers to cut into savings and their ability to afford increasing rental rates will lessen as the year goes on,” states the latest report.