Cincinnati and several other Midwest markets have been experiencing a boom in apartment sales while growth has worn off in the Sun Belt and investment slows across much of the country.

Sales over the past 12 months are up 133% in Cincinnati with $768 million in apartment deals, according to CoStar data as of May 22. That volume percentage is the highest among markets with at least 75,000 units.

Cincinnati is one of just seven markets with positive sales growth across the country over the past year. The other areas with apartment sales growth are Pittsburgh; Columbus, Ohio; and Omaha, Nebraska; reflecting the dominance of non-Sun Belt areas because of less volatile rent growth.

The remaining three markets with positive sales growth over the past year include San Jose, California; San Francisco; and Richmond, Virginia.

Midwest cities have led the country in rent growth over the past several months as Sun Belt increases have cooled considerably. “The Midwest will be the leader throughout 2023,” said Jay Lybik, CoStar’s national director of multifamily analytics.

Soaring interest rates started crimping apartment sales in the back half of last year and has carried over into this year. Industry executives had said that there is a lot of money sitting on the sidelines wanting to buy but relatively little is available as sellers seem content to ride out the slump.

That has worked to the benefit of Cincinnati and other Midwest markets. Don Murphy, a Cushman & Wakefield broker in Cincinnati, told CoStar News that the city tends to get a lot of interest from buyers when East Coast and Sun Belt markets become less desirable with slowing rent growth and higher construction levels.

“We don’t get the high highs or the low lows,” Murphy said. “We're a stable market. It’s just investors looking for stability.”

Most of Cincinnati's sales volume came in the final three months of last year with a record quarter of $461.3 million, driving sales for the year to an all-time high of $694.7 million, according to CoStar data.

Midwest investors, though, have led the way with big deals. One of the biggest came in October with Crawford Hoying, an investment firm based in the Columbus area, paying Nashville, Tennessee-based Nicol Investment $89.7 million for a downtown Cincinnati apartment property.

Murphy said the steady track record of rent growth has made it easier for buyers to finance deals.

Construction is the prime reason for why the Midwest is doing well now and the Sun Belt rent growth is slowing. Little construction in the Midwest means less competition for existing properties, which allows rent growth to hold steady.

The Palm Beach, Florida, market had the steepest drop in sales volume over the period at 85.9% with $558 million. About 10% of its existing number of units are under construction compared to 4.4% in Cincinnati. Palm Beach rent growth is at 0.3% while Cincinnati is at 5.4% annual growth.

Miami, one of the strongest apartment markets during the pandemic, is down 29.7% with $3.4 billion. Construction is at 17.4% of existing units, the highest in the country, and rent growth has slowed to 2.4% from a record high of 17.9% at the end of March 2022.