This is a narration of our weekly Rent and Operating Trends Report.
The Federal Reserve left interest rates unchanged at its June meeting, which concluded on Wednesday. While this is the first meeting without an interest rate increase since last March, the Fed indicated there may be additional rate hikes coming this year. The median “dot plot”, which measures the interest rate expectations of Fed members, increased to 5.6% at this week’s meeting. This signifies that many Fed members see the need for two additional rate hikes at some point in the future. Inflation has been trending downward, but if prices do not continue to cool, the Fed will likely raise rates again in July or September. The pause allows the Fed to monitor the economy and ingest additional data before its next move, but Fed Chair Powell warned against thinking that the monetary tightening cycle is over.
Multifamily fundamentals were mixed last week as NER increased another 10 basis points. Traffic and leasing were flat at the national level, while occupancy dropped slightly. June is typically the strongest month of the year in the apartment industry, and the general steadiness is an indication we will see weaker performance in 2023 than originally expected. Continued demand has created a solid foundation for our industry, but growth will be hard to come by at the national level.
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