June was a strong month for rent collections as the U.S. apartment sector experienced record demand and rent growth spurred by the resurgence of the economy.
The National Multifamily Housing Council (NMHC) found that 95.6% of apartment households partly or fully paid their rent in June, according to the organization’s monthly survey of more than 11 million units. This was an increase from 94.6% in May, and just a slight decrease from 95.9% in June 2020.
The strong June rent collection results coincided with further decreases in COVID-19 cases and more vaccinations throughout the country, according to data from the Centers for Disease Control and Prevention (CDC).
While COVID-19 cases have been reduced, employment is heating up. The U.S. economy added 850,000 jobs in June, according to the U.S. Department of Labor. The unemployment rate increased slightly to 5.9% from 5.8%, but that was a result of more people coming off the sidelines and returning to the job market to look for new positions.
The employment growth is fueling record apartment demand, according to real estate data and analytics company Real Page. The U.S. apartment sector set a record for units absorbed in the second quarter with 219,909 units, Real Page indicated, far exceeding the paltry 33,000 units absorbed in the second quarter of 2020, which was impacted by the start of the pandemic.
Notably, Real Page pointed out that while Sun Belt metro areas continued to have high demand for units, there was a huge recovery for gateway cities, such as Los Angeles, Chicago, Washington, D.C., and New York City.
Due to the heightened demand and a shortage of apartments across the country, rents rose 6.3% year-over-year in June, which was the largest 12-month increase in two decades, according to Real Page. Moreover, the national average monthly rent increased to $1,513, crossing the $1,500 benchmark for the first time ever.
As the economic resurgence is expected to continue throughout the summer, the U.S. multifamily sector has the potential to be further bolstered.