"The months of March-April-May and into July, those are the months where we see more demand. And so rents rise year after year, but this is a drastic change from that and understandably so," said Bruce McClenny, president of ApartmentData.com, a firm that tracks the multifamily industry.
Across the Houston area, rents are down by an average of 1.2% in May, to $1,046, compared to March and are at their lowest mark overall in six months, and some of Houston's market areas are down by 4% or more.
One key factor is that for the first time in over a decade, more people are leaving apartments than signing up for new leases, leading to negative absorption, an indicator of supply and demand. In May, Houston typically sees around 1,800 net leases; this May it was minus 200. Occupancy rates dipped below 89% as well, according to ApartmentData.com.
"More people moving out than moving in, so there’s less people living in apartments," he said.
Protection against evictions began to lift in May, but local officials have called for extending the moratorium through August.
The decline in leasing is also prompting increasing use of discounts to stimulate demand. For Class A apartments, the most expensive in the city, over 60% of communities are offering some type of deal, with the average discount above 8%. Some are offering as many as three months of free rent, such as the Drewery Place high-rise in Midtown.