This is a narration of our weekly Rent and Operating Trends Report.
The June jobs report showed continued steady growth, as 209,000 new jobs were created, and the unemployment rate fell 10 basis points to 3.6%. Economists had estimated 240,000 new jobs to be created and despite the slightly weaker than expected report, interest rates across the treasury yield curve increased with the 10-year treasury rate topping 4% for the first time since March. The cause for the sudden increase in rates is wage inflation. Average hourly earnings were up 4.4% on a year-over-year basis in June, and the elevated wage growth will increase the Fed’s likelihood of raising their benchmark interest rate again at their meeting at the end of this month. Signs of a strong economy remain, yet the persistence of inflation will likely keep the Fed committed to their monetary tightening policy.
Multifamily fundamentals were mixed last week; occupancy and traffic declined modestly while ATR and NER improved. The general sluggishness in leading indicators provides further evidence that the traditional spring rental season was weaker than in years past, and we may have already begun the flattening of fundamentals that is usually seen late in the third quarter. NER continues to increase slowly, but year-to-date rent growth is below the historical average.
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