The Indianapolis area's annual apartment rent growth topped the strongest markets in Florida in December to close a year when a surge in U.S. rent prices began to ease.
The metropolitan area including Indiana's capital had the highest annual rent growth in December at 7.4% to beat out Miami’s 6.8%, according to the latest report from CoStar Group’s Apartments.com. Indianapolis moved to the top as rent growth declined at a slower pace than other markets.
Rent prices have slowed considerably across the country because of lower demand, a stout construction pipeline and economic uncertainty kept more people in place rather than moving. The Sun Belt, particularly in Florida, no longer is as dominant as it was in 2021 and much of 2022 because migration patterns have slowed.
“With 2023’s national forecast predicting the highest new supply totals since the 1980s, expect vacancy to rise above 7% and rent growth to push much lower,” Jay Lybik, CoStar’s national director of multifamily analytics, said in a statement.
Las Vegas and Phoenix were the only two markets with annual rent prices dropping in December among the 40 largest U.S. apartments markets tracked by Apartments.com.
Palm Beach, Florida, and North New Jersey were the only markets with increases in rent during the fourth quarter from the third quarter. Miami and Fort Lauderdale were flat.
Seattle, however, had the biggest drop in rent in the final three months of 2022 compared to the third quarter at 2.6%. Denver followed in a group of eight markets with rents dropping 2% or more. Rounding out the eight for quarter-to-quarter rent drops are Raleigh, North Carolina; Las Vegas; San Jose, California; Charlotte, North Carolina; Salt Lake City; and Atlanta.
Miami had been at the top in November and October for annual rent growth as prices slowed. November’s annual rent growth was 7.7%, down from 14.6% in July.
Apartment construction has boomed in the Miami area. There are 28,383 units under construction, a record level that represents 15.6% of the existing 181,094 units.
Indianapolis, which had been rising in the annual rent growth ranks over the past few months, just 5,245 new units are under construction, which would expand the region's existing inventory by a modest 3.2%. Cincinnati, which ranked third for annual rent growth in December behind Miami, has a multifamily construction pipeline that would increase its existing inventory by 4.2%.