This is a narration of our weekly Rent and Operating Trends Report.
The Fed is holding its final meeting of the year this week and they are likely to leave interest rates unchanged. After rapidly increasing interest rates through the first half of the year, the Fed has now kept rates stable since July. Many market prognosticators expect rates to drop next year, with some calling for rate cuts as soon as the spring. Given the strength of the economy, I would not expect to see rate cuts until late next year at the earliest. The November Consumer Price Index was released this week, and while inflation inched downward on an annual basis to 3.1%, it remains slightly above the Fed’s target. Higher inflation will keep the Fed from cutting rates, however I do not see this report as a catalyst to raise rates either.
Multifamily fundamentals were mixed last week. Of note, occupancy was flat on a week-over-week basis for the first time in months. One week is not enough to declare a trend, yet stabilizing occupancy would be a great achievement for the industry. Leasing activity was also flat last week while traffic and NER dipped slightly. Another potential point of optimism is that annual growth figures are improving. Occupancy is down only 69 basis points and NER is down only 140 basis points. Both figures were deeper in negative territory over the past few months.
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