Despite losing some momentum in May, Phoenix apartment rents are still growing at the second-fastest rate in the country.
Phoenix rent growth cooled slightly between April and May, falling from the recent peak logged in April. However, rent growth in the year-ending May remained very strong at 8.2%, more than double the nationwide increase of 3.1%, according to RealPage, Inc. Among the nation’s 50 largest apartment markets, only one other market grew rents at a quicker pace – Las Vegas, at 9.0%.
Rounding out the top five spots for rent growth nationally were Austin (5.0%), Sacramento (4.9%) and Raleigh/Durham (4.9%).
Despite strong growth, apartment rents in Phoenix are still a bargain compared to the national norm. Monthly rents in Phoenix average at $1,134, compared to the U.S. average of $1,394.
Encouraging rent growth, occupancy in Phoenix has climbed for five consecutive months, landing at 96.3% in May, which is above the nationwide average of 96.0%. This is the strongest occupancy rate Phoenix has seen during the current economic cycle, which began in 2010.
“It’s impressive that operators and owners continue to push rents above the 8% mark, while also increasing overall occupancy,” RealPage market analyst Adam Couch said. “A big influence here is demand, as Phoenix is producing a ton of jobs that are fueling apartment absorption. The market has been essentially full for over a year now, and the most recent data shows that vacancies continue to go down.”
Helping occupancy tick up in Phoenix recently, demand has outpaced supply. The market absorbed 9,958 units in the past year, including more than 2,200 in May alone. Meanwhile, 7,810 apartment units were completed in Phoenix, and another 10,749 are set to be delivered in the next 12 months, growing the city’s stock by 3.1%.
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