HOUSTON, TX - The Houston-Baytown-Sugar Land, TX Metropolitan Statistical Area (MSA) ended the year with occupancy lower than the national average, though rent growth was steady.
According to Axiometrics, the leader in apartment market research and analysis, the Houston metro's occupancy in December was 94.0%, 30 basis points lower than the 94.3% reported in November 2014, and 10 basis points higher than the 93.8% reported in December 2013.
In comparison, national occupancy was 94.6% in December 2014, which represented a slight decrease from the 94.8% of November 2014 and an increase from the 94.1% of December 2013.
"New supply, and a lot of it, is the main reason for Houston's somewhat sluggish occupancy figures," said Stephanie McCleskey, Axiometrics Vice President of Research.
Axiometrics identified 14,415 units delivered to the Houston MSA, close to double from the year before. Within the next year, Axiometrics is forecasting more than 16,000 units to be completed.
"What is amazing is that year-over-year occupancy has increased, even by a small amount," McCleskey said. "What's also interesting is that rent growth also increased from December 2013. Landlords are not bothered, as yet, by the added supply."
Annual effective rent growth in December was 5.54%, a slight increase from the 5.42% reported the month before and an 80-basis-point increase from the 4.70% from December 2013. Houston renters were paying, on average, $1,051 for their units. In December 2013, they were paying $983.
Even with continued dynamic job growth throughout the MSA, McCleskey said she anticipates that both rents and occupancy will continue to moderate in 2015 due to new supply.
A recent Axiometrics blog reported that the recent drop in oil prices has caused Axiometrics to revise its forecast for the Houston MSA's employment and market fundamentals. Rent growth is anticipated to slow to 3.0% for much of 2015.