North Texas apartment demand couldn’t keep up with construction in the first quarter.
But that didn’t mean renters caught a break.
Average apartment rents in the Dallas-Fort Worth were up 1.9 percent from first quarter 2017 to $1,081 a month, according to the latest data from RealPage.
The Richardson-based apartment industry service firm estimates that net D-FW apartment leasing totaled 1,721 units in the first three months of 2018.
That’s an improvement from first quarter 2017 when there was a small decline in net leasing.
The early months of the year are typically the slowest period for apartment leasing.
Apartment demand fell way short of the 6,972 new rental units that opened their doors in the first quarter.
"As in the nation as a whole, Dallas-Fort Worth’s performance got off to a rough start in 2018," RealPage chief economist Greg Willet said. "That seasonally slow leasing period is more difficult to deal with when the new product delivery volume is peaking."
With the surge in new apartments hitting the market this year, apartment rent increases in the area have dropped significantly from recent years where renters saw between 3 percent and 6 percent annual price hikes.
The first quarter year-over-year apartment rent increase was the smallest since 2010.
"With so many new units moving through initial lease-up, it’s not surprising to see rents flatten in that top-tier product segment," Willett said.
Widespread apartment building across the country also curbed nationwide first-quarter rent increase. Countrywide rents were up just 2.3 percent – also the smallest gain since 2010.
"With so much new supply coming on stream, even a short period of sluggish demand can do some real damage," Willett said. "It’s difficult to maintain pricing power in such a competitive leasing environment."
Because of the construction, D-FW average apartment occupancy fell to 93.9 percent – slightly below the national average.
Another 32,379 apartments are still under construction in North Texas.
"That future supply is by far the biggest block of product on the way nationally," Willett said. "Leasing activity naturally escalates during the warmer weather months, and the fact that Dallas-Fort Worth still is producing so many jobs will help boost the need for more housing.
"Still, with the apartment stock growing at such an aggressive pace, rent growth certainly isn’t going back to the levels seen a bit earlier in this cycle."