This is a narration of our weekly Rent and Operating Trends Report.
Inflation remained unchanged in September with prices rising 3.7% compared to the year before. Annual price increases were flat after increasing in both June and July, according to the Consumer Price Index. On a short-term basis, prices increased 0.4% from the prior month. While the reported figures were slightly higher than analysts’ expectations, I do not think this report will materially change the course of the Fed’s monetary tightening cycle. I anticipate one more interest rate increase this year, at either the November or December meeting. The 10-year treasury has retreated from recent highs, but remains elevated at 4.6%.
Apartment performance continues to decline, with rent and occupancy falling the fastest last week. Leading indicators appear to have stabilized, and the national conversion ratio has remained steady around 33%, but occupancy has fallen quickly over the past 4-6 weeks and rents are falling along with it. At the national level, the slowdown is likely to continue through the end of the year and into early next year before some stability is found.
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