RealPage Slightly Strengthens Forecast in Most Apartment Markets Based on Economic Indicators

As 2024’s 1st quarter comes into focus, RealPage has updated its forecast to reflect strengthening economic markers that influence the multifamily industry.

Our most recent projections for annual effective rent change in calendar 2024 suggest that within the nation’s 50 largest apartment markets, 12% are expected to witness rent increases of 3% or higher. The bulk of major markets are forecasted to experience growth between 2% and 2.9%. Meanwhile, 38% or markets are predicted to see rent growth ranging from 1% to 1.9%. The smallest portion of markets, 8%, will likely encounter growth below 1%. These forecasts are based on the latest economic indicators and their expected performance in the near term.

Following a robust addition of over 637,000 jobs in 4th quarter 2023, the U.S. economy maintained its momentum by adding more than 500,000 jobs (seasonally adjusted) in the initial two months of 2024, showcasing the labor market's continued strength. During 4th quarter 2023, Los Angeles led in job creation, adding nearly 49,000 positions, with New York and Houston following closely behind, contributing 38,500 and 20,000 jobs, respectively. In contrast, the early months of 2024 saw Houston and Austin at the forefront of job growth, adding 16,600 and 10,700 jobs, with Boston, Raleigh/Durham, and Chicago also making significant contributions. This shift has led us to revise our employment forecasts upward for many markets, particularly highlighting Austin, Las Vegas, Houston, Orlando and Phoenix as key players among the larger U.S. markets.

Despite higher-than-target inflation, we anticipate that the Federal Reserve may start reducing interest rates in the latter half of the year, although the timing and magnitude of cuts could be influenced by continued positive surprises in the job market.

After a 3.2% growth in GDP in the last quarter of 2023, projections for 2024 suggest a slowdown to between 2.4% and 2.7%. Nonetheless, consumer spending, which saw increases of 0.2% in January and 0.8% in February, is expected to remain a significant driver of GDP growth. Retail sales, a crucial gauge for rent growth, are forecasted to rise by about 2% this year.

For more economic insights that influence the multifamily industry, follow our Economy Express series.