This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy grew by 2.8% in the second quarter according to the initial estimate of GDP released last week. Consumer spending drove the strong quarterly growth, and the overall GDP increase was double the rate of growth in Q1. Despite elevated interest rates the economy continues to move forward at a strong clip. Speaking of interest rates, the June Personal Consumption Expenditures Core Index slowed from 3.7% to 2.9% on an annualized basis. As the Fed’s preferred measure of inflation, the slowing PCE should provide more fodder for the Fed to cut rates in the coming months. The Fed meets this week, and while I doubt rates will be cut at this meeting, they will likely use the opportunity to lay the groundwork for a September cut.
Multifamily fundamentals were mostly flat to negative last week at the national level. One metric showing modest improvement however is concessions. This is a welcome sight for operators who have been mired by high concessions for the past two years. As the end of the current supply wave progresses, concession activity will likely normalize to its long-term average. Certain sunbelt markets will maintain high concessions through the rest of this year and into next, but in time, concessions in those markets will also level out. Net effective rent also posted a modest gain last week.
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