Apartment rents in North Texas are slowly coming down as thousands of new rental units hit the market.
Asking rental prices in Dallas-Fort Worth fell 1.5% in November compared to the same month last year, according to a new report from Richardson-based RealPage. Nationally, rents increased by just 0.16% over the same period.
“Apartment rent growth has slowed sharply since its peak in March 2022,” Jay Parsons, chief economist at RealPage, said in a report. “Low rents have everything to do with supply and very little to do with demand.
“There is plenty of demand for apartments at today's rent levels, but the demand story is being overshadowed by 50-year highs in construction,” he said.
More than 70,000 apartment units are under construction in North Texas, the most of any metropolitan area in the United States.
“Rents are falling the most in markets with the most supply,” Parsons said.
Last month, average asking rents for apartments in the Dallas area fell 1.4% compared to November 2022, and rents in the Fort Worth area fell 1.8% year over year.
Parsons said rental discounts are increasing because of the huge supply, with about 27,000 new apartments opening in D-FW this year.
“The proportion of apartments offered in concessions is increasing slowly,” he said in an email. “The share of available non-new apartments in the Dallas area offering rental discounts has increased from 5.7% a year ago to 11.3% now.
“This is the highest share since early 2021, when we were still emerging from the pandemic period.”
Some metropolitan areas in the U.S. are seeing rents fall more dramatically than D-FW.
November rents fell 6% year over year in Fort Myers, Florida, and 5.9% in Austin.
RealPage reports that Midland-Odessa saw the biggest apartment rent increases last month, with average asking rents more than 11% higher than a year ago.
More than 461,000 new apartment units will be completed this year across the country, with approximately 670,000 units scheduled to be completed by 2024.
“New construction starts have fallen sharply recently, so we should see a significant drop in completions after that,” Parsons said. “As a result, occupancy rates should recover and rent growth should accelerate again.
“Since the 1980s, the number of new apartments built each year has never exceeded 400,000, and is generally around 300,000,” he said.
