News & Research Listing

Research, Research Reflections
Economic & Industry Update September 2021

Economic Indicators

The Labor Market

The August jobs report disappointed with fewer jobs added than anticipated, but enough to cause the unemployment rate to tick down to a new pandemic low of 5.2%.

The 235,000 new jobs bring the pandemic deficit down to 5.3 million jobs lost.

Gains were registered in professional/business services, transportation/ warehousing, and private education.

Top States for Job Recovery January 2020 to August 2021

Unemployment Claims

Initial claims for unemployment edged up from their pandemic low the prior week, mainly due to Hurricane Ida.

Continuing claims (through September 4) were also at a pandemic low, totaling 2.7 million.

Unemployment Claims Week Ending September 11, 2021

Consumer Sentiment

Consumer sentiment moderated in September after an 11-point plunge in August when it hit the lowest level since 2011.

The Delta variant and inflation fueled consumers’ pessimism with the latter having potential implications on spending patterns in the coming months.

University of Michigan Consumer Sentiment Index September 2021

Personal Saving Rate

The personal saving rate fell to the 9-10% range over the past 3 months, now only slightly elevated from pre-pandemic levels.

The waning of fiscal support will cause the saving rate to further moderate towards longer-term averages.

Personal Savings Rate July 2021

Small Business Optimism

The Small Business Optimism Index inched up to 100.1 in August.

32% of survey respondents plan to hire, up from 27% last month, an indication that business conditions are moving in the right direction.

About half reported having difficulty filling jobs while 26% plan to increase compensation.

National Federation of Independent Businesses Small Business Optimism Index August 2021

The Back to Normal Index

The Back to Normal Index tracks twelve high frequency data series plus monthly employment figures, using February 29, 2020 as the baseline for “normal.”

The index exhibited signs of weakness over the last 10 days, primarily due to a decrease in restaurant visits and airport passenger traffic, activities being impacted by the persistent spread of the virus.

Back to Normal Index September 2021

Home Price Index

The S&P/CoreLogic Case-Shiller 20-City Composite Home Price Index reached another new high in June, increasing 19.1% year-over-year.

There has been little variation in the cities with the highest growth rates: Phoenix (29.3%), San Diego (27.1%) and Seattle (25.0%) continued to top the list. 

S&P/CoreLogic Case-Shiller 20-City Composite Home Price Index June 2021

New Home Sales

After declining for 3 months, new home sales ticked up slightly in July.

On a year-over-year basis, sales are down 27.2% following last summer’s buying frenzy.

Although the months of supply increased substantially over the past year to 6.2, a run-up in price appreciation has dampened demand.

New home sales July 2021

New Home Building

Overall homebuilder confidence improved slightly in September but remained somewhat muted.

The index which measures buyer traffic increased by two points but was well below levels seen earlier this year and later in 2020.

Price pressures eased on some materials, but labor market and supply chain issues continued to challenge builders.

NAHB/Wells Fargo Housing Market Index September 2021

Housing Permits

Multifamily construction permits reached a six-year high in August with 632,000 permits issued on an annualized basis, a good indication of robust new supply in 2022.

Single-family permits have topped 1,000 annual units for 13 consecutive months.

Housing Permits August 2021

Housing Starts

Multifamily construction starts hit a new pandemic high at 530,000 annualized units.

According to NAHB’s Home Building Geography Index, multifamily construction has increased significantly in small metro core markets as well as suburban markets.

Housing starts Aug 2021


Apartment Industry Indicators

Apartment Rental Rates

Multifamily asking rents increased significantly by 10.3% year-over-year basis in August to $1,539.

All top 30 metros tracked by Yardi had positive year-over-year rent growth for the first time since the beginning of the pandemic.

Top and bottom markets for year-over-year rent growth August 2021

Apartment Investment Trends

The 2021 Mid-Year Powerhouse Poll data was conducted by Berkadia July 2021 to assess expected commercial real estate activity and opportunities for the second half of 2021. The sample was based among Berkadia professionals throughout the U.S., totaling 179 overall respondents.

Key finding:

  1. While GSEs are expected to remain the primary source of financing, the reduced caps and the availability of capital have seen debt funds more active in the market. 
  2. Inflation and interest rates continue to gain ground as trends on the radar for lenders and investors alike as the impact of COVID on the economy evolves.
  3. 78% of Berkadia professionals expect an increase in multifamily transactions by the end of 2021.
  4. In upcoming months, investor interest will be focused on Class B and Class A housing.
  5. The Southeast and Southwest regions are expected to be of most interest to institutional investors.
  6. 45% of respondents believe modifying tax credit policy will have the greatest impact on the affordable housing crisis.

Source: Berkadia 2021 Mid-Year Powerhouse Poll-September 2021

Student Housing

Of the 200 colleges and university which Moody’s Analytics REIS tracks, roughly 37% are requiring coronavirus vaccines.

While there are still questions regarding in-person strategies, conditions are expected to look better than last year during the height of the pandemic however still above their pre-COVID levels.

For Fall 2021-Fall 2022, the student housing sector is expected to see vacancies fall from 10 basis points for properties renting by the unit to 20 basis points for properties renting by the bed.

Rents are expected to decline by 1.8% for properties renting by the unit to a decline of 2.7% for properties renting by the bed.

The largest rent decline for properties by bed are expected in the Southwest (-4.2%) while the largest rent decline for properties by unit are expected in the Northeast (-4.5%).

On the other end, the slightest rent decline for properties by bed are expected in the West (-1.8%) while the slightest rent decline for properties by unit are expected in the South Atlantic (-0.8%).

For properties that rent by bed, inventory is expected to grow by 2.4%, which would be the weakest growth recorded since at least 2014. While on the other hand, for properties that rent by unit, inventory is expected to grow by 1.2%, which would be largest growth recorded since at least 2014.


Source: Capital Trends US Apartment Q2 2021 by Real Capital Analytics September 2021

View previous Economic & Industry Updates here:

October 20, 2021
Economic & Industry Update September 2021
Special Reports
Property Management Industry Pulse

Top Challenges and Needs in Rental Housing

In July and August 2021, AppFolio sponsored an online survey of rental housing providers in the United States, conducted by the National Apartment Association (NAA) and ndp | analytics. The survey, which received a total of 1,048 responses, focused on the top challenges currently facing the rental housing industry. Below are the key survey findings.

Top Three Challenges Facing Rental Housing Providers

Respondents were asked to select the three topics that are most challenging right now.  The most common top challenge was HR, staffing and recruitment; 74% selected it as one of their top three challenges. Operational efficiencies and maximizing revenue were the second and third most common challenges with nearly 63% and 48% selecting them as a top challenge, respectively.

Human resources issues, operating more efficiently and maximizing revenue have been the top concerns for rental housing providers for quite some time. However, the impacts of COVID-19 have heightened these challenges for owners and operators.  

Top Three Challenging Activities Within HR, Staffing and Recruitment

After selecting their top three challenges, respondents were asked to rate a set of activities within each of those topics. Each activity was rated on a scale of one to five, with five being the most challenging.

Withing the topic of HR, staffing and recruitment challenges, attracting new team members, training new hires and reducing turnover were rated as the most difficult activities. Employers are struggling to keep their on-site offices fully staffed as a result of high salary demands, low morale, concerns surrounding COVID-19 and labor shortages.


Top Three Challenging Activities Within Operational Activities

Inside the issue of operational efficiencies, finding high quality vendors, reducing labor-intensive processes and reducing costs were rated as the most difficult challenges. Changes brought on by the pandemic have led owners and operators to rethink their operational strategies in order to improve their bottom lines and employee productivity.

Top Three Challenging Activities Within Maximizing Revenue

Among the subject of maximizing revenue, increasing net operating income (NOI), mitigating bad debt loss and returning performance to pre-pandemic levels were rated as the most difficult challenges. Rental housing providers are struggling with escalating expenses due to COVID-19 and rental income losses.

Most Crucial Needs for Rental Housing Providers and Their Solutions

Respondents were asked to elaborate on their top challenge, including how they are currently solving their problems today and what they need to help solve the challenge moving forward.

In Conclusion

The survey responses also illustrated the continued bifurcation in the industry with some owners concerned about whether or not they will be able to stay afloat and others reporting strong rent growth and high occupancy rates. One thing that came through loud and clear was the desire for the pandemic to end and for continued strong economic growth. An end to eviction moratoriums, more efficient and faster distribution of rental assistance funds and improvements in the labor market will go a long way in alleviating many of the challenges rental housing providers face today.

Download the Full Report 

For more information contact Paula Munger 

October 12, 2021
Special Reports
NAA Inflation Tracker: August 2021

CPI, Latest Release, July 2021 5.3%

The Consumer Price Index (CPI) rose 5.3% on a year-over-year basis, the same rate as the prior month. Prices excluding food and energy (core CPI) moderated somewhat, rising 4.2%.  Breaking down the data on a monthly basis reveals core CPI increasing at its slowest pace in 5 months.

This month’s price increases were driven by shelter, food, energy and new vehicles. The CPI for owners’ equivalent rent increased 0.3% on a monthly basis, on par with pre-pandemic levels, while the CPI for rent of primary residence remains below longer-term averages, rising 0.2% in July.

There are signs in the July data that prices closely tied to the reopening of the economy – used vehicles, apparel and airline fares, for example – are beginning to moderate. Prices for used cars and trucks rose 0.2% after average monthly increases of 9.3% during the second quarter while airline fares actually dropped. It is too soon to tell if this is the beginning of trend, but it is certainly on the right track to match the Fed’s expectations of temporary inflation.

Alternative Measures of Inflation, July 2021

We looked at the Atlanta Fed’s sticky price index in the June and July Inflation Trackers. This month, we will focus on yet another alternative measure of inflation. The Federal Reserve Bank of Cleveland calculates the median CPI by omitting outliers (small and large price changes) and focusing on the interior of the distribution of price changes. Thus, it can provide a better measure of underlying inflation – that is, inflation that will likely persist over several years.

The median CPI rose 3.7% at an annualized rate and remains in line with levels hit before the pandemic. Components experiencing the greatest monthly increases were hotels, gasoline and personal care services. Significant declines were recorded for car and truck rentals, motor vehicle insurance and fresh fruits and vegetables.

Alternative Measures of Inflation, June 2021

The Personal Consumption Expenditures (PCE) Index is the measure of inflation the Federal Reserve Bank uses in its policy decisions. It is produced by the Bureau of Economic Analysis and uses different formulas, different weights and has a different scope compared to the Bureau of Labor Statistics’ (BLS) CPI. 

In June (the most recent data available) the core PCE increased 3.5% year-over-year, a 30-year high. May’s increase was revised downward and overall, the June reading came in somewhat lower than consensus forecasts. At its current rate of 3.5%, it would still take 6 more months for the PCE to achieve a five-year average of 2%, the Fed’s long-term target. The Federal Open Market Committee, the Fed’s policy arm, will not meet in August but stated in their July meeting that there would be no change to monetary policy at this point.

The Producer Price Index (PPI), June 2021

The BLS aggregates all construction inputs excluding capital investment, labor and imports for single-family and multifamily construction. Recent declines in lumber prices have not been enough to offset price increases of other building materials, resulting in construction cost increases that continue to break records. In June, the inputs to new construction rose nearly 30% year-over-year for both property types.

Wage Growth vs The Employment Cost Index, Q2 2021

The Employment Cost Index (ECI) is a quarterly measure of the change in the costs of labor. Unlike average hourly earnings, the series typically used for wage growth, the ECI calculation is not impacted by the change in employment levels among occupations and industries which can significantly skew wage levels. It also includes the costs of benefits to employers. The ECI is considered a purer measure of labor costs and is closely watched by the Fed.

The ECI increased 3.1% in Q2 2021 and while that represents solid growth, it remains largely in line with pre-pandemic levels - so it likely won’t raise red flags for the Fed just yet. On a quarterly basis, wages themselves rose just 1.9% year-over-year, significantly lower than pre-pandemic levels and reflective of more lower wage workers returning to work.  

What to Watch in the Next Month

  • Inflation expectations play a big role in actual inflation. Upcoming surveys of consumers, such as those published by the University of Michigan and the Conference Board, as well as businesses will reveal if the surging delta variant of COVID-19 is impacting the outlook for demand and prices of goods and services.   

Next Tracker: September 14, 2021

August 13, 2021
Research, Apartment Market Pulse
Summer 2021 Apartment Market Pulse

Pent-Up Demand Exceeds Expectations

U.S. Apartment Market

During the second quarter, the apartment industry experienced booming positive metrics across the board. Unceasing multifamily demand in conjunction with supply constraints in many markets resulted in record-setting rent growth. After a period of rent losses at the beginning of the pandemic, the national rental rate has recovered and is now well above pre-pandemic levels. According to RealPage, average monthly effective rent stood at $1,480, the highest on record since they began tracking data in 1998. Furthermore, concessions have declined as the economy and COVID-19 vaccination rates improve. According to CoStar Group, market-rate properties with 10 or more units had a concession rate of just 0.8%, a decrease of 0.6 percentage points since the peak of the pandemic. As reported by REIS, markets that have shown strong demand and increased renter migration ranked highest for rent growth. Tucson, Ariz.; San Bernardino/Riverside, Calif.; Tacoma, Wash.; Las Vegas, Phoenix and Columbia, S.C., logged the highest annual effective rent growth, increasing by 3.0% or more. Meanwhile, San Francisco, New York City and San Jose, Calif., registered rent losses over 10.0%.

Progressive employment levels continued to power robust apartment demand. Annual absorption totaled roughly 500,000 move-ins through Q2 2021, significantly outpacing annual new deliveries, which totaled nearly 363,000. Overall occupancy at the end of the second quarter was 96.2%, the highest level since Q3 2019, representing an historically high annual growth of 0.6 percentage points. According to REIS, low cost-of-living markets including Columbia, S.C.; Salt Lake City, Baltimore and Knoxville, Tenn., led the nation with declining vacancy rates since Q2 2020. On the other end of the spectrum, markets that posted the greatest vacancy increases included Washington, D.C., Oakland-East Bay, Calif., Minneapolis, Charleston, S.C., and Louisville, Ky.

Despite labor shortages and elevated lumber prices, construction activities in the multifamily housing sector strengthened. According to Census, the seasonally adjusted annual rate for multifamily construction starts in June 2021 amounted to 474,000 units, a significant increase of 30.6% year-over-year. Units completed also increased by 33.8% to 416,000 units. Multifamily building permits significantly increased by 19.3% to 483,000 units. The top-ranking markets for permits issued during May 2021 included New York City (2,967 units), Miami (2,149 units), Dallas (1,825 units), Austin, Texas (1,816 units), and Nashville, Tenn. (1,420 units).

U.S. Capital Markets

With surging demand and rent, investors have regained confidence in the apartment sector. As reported by Real Capital Analytics, closed apartment sales transactions during Q2 2021 drastically increased year over year by 221.5%, reaching a historic second quarter high of $49.4 billion. A total of 285,091 units changed hands, up by 179.0% compared to the same time last year. The average price per unit increased by 14.2% to $190,276. The average cap rate remained at 4.9%, down by 45 basis points. Investors are gravitating toward fast-growth Sun Belt markets such as Dallas, Phoenix and Atlanta, which were among the leading markets for deal volume during Q2 2021.

U.S. Economy

Despite fears of inflation and substantial increases in new COVID-19 cases among the unvaccinated population, the economic recovery continued into the summer. Several recent employment indicators posted positive results, although the labor market remains highly constrained. After hitting its lowest level since the pandemic began, initial claims for unemployment posted a surprising increase for the week ending July 17. However, the Bureau of Labor Statistics’ (BLS) June Employment Situation Report was strong, with 850,000 jobs added plus an upward revision of 15,000 jobs in April and May combined. The unemployment rate ticked up slightly to 5.9% but was largely because of workers reentering the labor force in search of work or workers choosing to leave their jobs. 

The labor market still has 6.8 million jobs to recover or add to return to pre-pandemic levels. Only two states have exceeded their payroll levels of February 2020: Idaho and Utah. At the opposite extreme, California remained down 1.2 million jobs and New York is down 951,000 jobs as of June 2021. 

Source: U.S. Bureau of Labor Statistics

The number of job openings in May totaled 9.2 million, representing a series high since the BLS started tracking these data in 2000. The quits rate, the number of employees quitting as a percent of total employment, peaked in April at 2.8% and remained elevated in May at 2.5%, or about 3.6 million people quitting in just one month. Employees are quitting for several reasons, including family obligations, a glut of job opportunities, higher pay, more flexible work arrangements or as a result of a geographic move. Employers, in turn, continue to struggle, as evidenced by the National Federation of Independent Business’s most recent Small Business Optimism Survey, which revealed 46% of business owners had job openings that could not be filled, a slight drop from the prior month’s all-time high but more than double the 48-year historical average of 22 percent. 

Source: National Federation of Independent Business

Both the Consumer Price Index (CPI) and Personal Consumption Expenditure (CPE) index, which the Fed uses in its policy decisions, experienced significant increases in the past several months, intensifying inflation fears among consumers and businesses. The Fed maintained its position that it expects these increases to be transitory. Breaking down the data showed the items that comprised most of the increases in CPI are tied to either the reopening of the economy (airfares, hotel prices, gas) or supply chain constraints caused by the pandemic (new and used cars and trucks), both of which are temporary phenomena.


Heading toward the end of July, public health officials are warning of a fourth wave of COVID-19, predominantly the Delta variant and for the most serious cases, almost exclusively limited to those who are unvaccinated. With less than half of the total population fully vaccinated, according to the CDC, this development certainly merits concern not only for public health, but the economy as well. However, a recent Moody’s Analytics study of the rise in Delta variant cases in the U.K. showed little impact to economic activity. Nevertheless, COVID-19 remains a downside risk in any economic forecast.

The slow rollout of emergency rental assistance has kept the rental housing industry bifurcated with many small owners still not made whole and in precarious financial situations. For the larger, professionally-managed apartment sector, demand unleashed by the economic recovery and attendant household formation is showing no signs of letting up. Although personal savings rates remain elevated, soaring home prices are making it increasingly difficult for some renters to transition to homeownership. And as workers consider abundant choices and plan their next career move, the enduring appeal of the flexibility of renting will persist.    

July 28, 2021
Special Reports
NAA Inflation Tracker: July 2021

NAA Inflation Tracker

CPI, Latest Release, June 2021 5.3%

The Consumer Price Index (CPI) rose by 5.3% on a year-over-year basis while prices excluding food and energy (core CPI) rose 4.5%.  CPI hit higher levels during the Great Recession, but we have to go back to the 1990/1991 recession to see a level of growth this high for core CPI.

The Federal Reserve is standing by its position that inflation will be transitory and when breaking it down by category, it’s easy to see why. Prices for used cars and trucks were responsible for more than one-third of the all-items increase, up 62% year-over-year. Prices also increased substantially for new vehicles, airline fares and apparel. These are all tied to the reopening of the economy, which while occurring in phases, is a one-time event, a fact which should help alleviate fears of long-lasting inflation.   

Alternative Measures of Inflation, June 2021

The Federal Reserve Bank (FRB) of Atlanta uses measures of inflation it refers to as “Flexible CPI” and “Sticky CPI,” basically categorizing CPI components by price volatility. Goods and services with sticky prices, considered a more forward-looking approach and estimated to comprise 70% of headline CPI, do not typically respond to changing market dynamics quickly – think rent, education and public transportation. Flexible prices change far more frequently and often wildly – think gas, food and hotels.

In June, flexible price CPI increased 13.7% on a year-over-year basis while sticky price CPI increases remained unchanged from the prior month at 2.7%, in line with the 2019 monthly average of 2.6%.

Alternative Measures of Inflation, May 2021

The Personal Consumption Expenditures (PCE) Index is the measure of inflation the Federal Reserve Bank uses in its policy decisions. It is produced by the Bureau of Economic Analysis and uses different formulas, different weights and has a different scope compared to the Bureau of Labor Statistics’ (BLS) CPI. 

In May (the most recent data available) the core PCE rose 3.4% year-over-year, the highest increase in nearly 30 years, but tempered somewhat from the prior month’s growth. At its current rate of 3.4%, it would take 8 months for the PCE to achieve a five-year average of 2%, the Fed’s long-term target.

The Producer Price Index (PPI), May 2021

The BLS aggregates all construction inputs excluding capital investment, labor and imports for single-family and multifamily construction. Price increases for multifamily construction inputs have exceeded 10% for the past five months and soared to 26.5% in May on a year-over-year basis.

Wage Growth, June 2021

Private sector wage growth rose to 3.6% in June, in line with pre-pandemic levels. Breaking it down by sector reveals 7.1% growth in leisure and hospitality and 6.2% growth in retail trade. Wage growth is reflective of not only pay increases, but also signing bonuses as employers struggling to find workers provide extra incentives in order to stay competitive.  It is important to note that real average hourly earnings (earnings adjusted for inflation) for all employees decreased 0.5% from May to June.

What to Watch in the Next Month

  • Jerome Powell’s Semiannual Monetary Policy Report to Congress takes place on Wednesday, July 14 and inflation is sure to be the focal point of the Fed chairman’s testimony.
  • The recent decline in lumber prices should be evident in next month’s PPI data, so look for increases to multifamily construction inputs to ease somewhat.
  • The Employment Cost Index (ECI), a quarterly wage growth measure considered to be superior to average hourly earnings by some analysts and economists, will be released on July 30. The ECI is closely watched by the Fed.


Next Tracker: August 11, 2021

July 13, 2021
Apartment Market Pulse
Optimism Springs Eternal

U.S. Apartment Market

Spring 2021

Rising rental rates and rampant leasing activity during Q1 2021 indicated that the multifamily housing market is turning a corner. Pent-up demand driven by employment growth and the widespread distribution of the coronavirus vaccine was evident. Increasingly, more renters are becoming comfortable with moving to a new apartment home. According to RealPage, effective rental rates moved from $1,411 in Q4 2020 to $1,421 during Q1 2021. Lower-cost markets with limited apartment stock continued to thrive and outperform major markets. As reported by REIS, San Bernardino, Chattanooga, Memphis, Sacramento and Lexington recorded the highest effective rent growth levels during the first quarter. While gateway markets are starting to see hints of a bottoming pattern emerging, they are still among the nation’s laggards for rent growth. San Francisco, New York City, San Jose, Washington, D.C. and Oakland posted annual rent growth declines ranging from -6.6% to -14.8%.

Despite robust demand, apartment occupancy did not see any gains. Instead, occupancy levels inched down 0.1 percentage points to 95.5%. This signals that concessions offered by apartment owners attracted more existing renters than prospective renters. Properties tracked by Entrata reported that concessions were nearly 30% higher year-over-year as of February. According to REIS, Columbia, Greenville, Salt Lake City, Albuquerque and Knoxville were the leading markets with shrinking vacancy rates year-over-year. Markets that posted the greatest increases in vacancy included Washington, D.C., Charleston, Minneapolis, Raleigh and Louisville.

Similar to Q4 2020, apartment demand kicked off 2021 with repeated strong performance. RealPage reported that 353,453 annualized units were absorbed, far outpacing the 315,789 units that came online during Q1 2021. Sun Belt markets including Dallas (3,566 units), Miami (3,227 units), Austin (2,923 units), Orlando (2,593 units) and Phoenix (2,462 units) recorded the greatest absorption.

According to Census, the seasonally adjusted annual rate for multifamily construction starts in February 2021 amounted to 372,000 units, a decline of 27.6% percent year-over-year. Units completed increased slightly by 2.8% to 314,000 units. Multifamily building permits significantly increased by 24.1% to 495,000 units. The top-ranking markets for permits issued during February 2021 included New York (6,821 units), Austin (5,206 units), Los Angeles (3,562 units), Washington, D.C. (3,464 units) and Dallas (3,284 units). With 652,000 multifamily units in the pipeline across the U.S, competition for renters will continue to be fierce, particularly among the class A stock.

U.S. Capital Markets

Apartment deal volume began the new year at muted levels. As reported by Real Capital Analytics, closed apartment sales transactions during Q1 2021 totaled $25.1 billion, down 36.6% from the same time last year. Investors exchanged 154,000 units, 38.2% less than February 2020. Multifamily values remained steady; the average price per unit increased to $182,300, up by 4.9%. The average cap rate was 4.9%, down by 45 basis points. Garden-style asset sales totaled $17.9 billion during Q1 2021, while mid-/high-rise properties totaled $7.9 billion. Los Angles, Phoenix, Dallas, Atlanta and New York City were the top markets for deal activity during the first quarter. Morgan Properties and Olayan Group partnered together for a massive transaction, acquiring 14,414 units in 11 states for $1.7 billion from STAR Real Estate Ventures. 

U.S. Economy

In March, the Employment Situation Report published by the Bureau of Labor Statistics (BLS) turned in its strongest performance since the height of last summer with 916,000 jobs added. Upward revisions to January and February translated into an additional 156,000-job gain. Pandemic job losses remained elevated at 8.4 million. Initial claims for unemployment also remained high by historical standards, but have begun to moderate somewhat, coming in below 750,000 for three consecutive weeks ending April 3.

BLS job openings data for February also revealed a revitalized labor market as states and jurisdictions began lifting restrictions amid increased vaccinations. Just under 7.4 million positions were available at the end of the month, a level that is in line with 2018-2019. Job openings in the healthcare and social assistance industry, as well as the leisure and hospitality sector, experienced the greatest monthly increases.

The ramp up in vaccinations, the passage of the $1.9 trillion American Rescue Plan (ARP) and other strong economic indicators caused many economists and analysts to substantially increase their employment and GDP forecasts, most of which exceed 5% in 2021. Some of the larger investment firms are forecasting 2021 GDP growth in the 8% range, a rate of growth not seen since 1950. The Federal Reserve has one of the more optimistic forecasts for the labor market with a 4.5% unemployment rate projected by the end of 2021.

The number one risk to the economy, according to the most recent outlook survey from the National Association for Business Economics (NABE), is a variant of the coronavirus against which the vaccines are ineffective. It garnered an overwhelming 67% of responses, compared to the second and third highest risks: Slow vaccine distribution and fiscal policy inaction/policy gridlock, at 10% each. It is important to note that the survey was conducted prior to the passage of the ARP and that the greatest upside risk to the economy was a large fiscal stimulus program.


It will be a close race between vaccinations and COVID-19 infections, both of which were increasing in early-to-mid April. Even with rising cases, many jurisdictions are easing restrictions by increasing capacity at restaurants, shops and event venues and opening in-person learning to more students. The Transportation Security Administration reported the highest air passenger traffic since the pandemic began, with 9.5 million passengers passing through TSA checkpoints during the week ending April 17, 2021. Life is beginning to look more normal for many Americans and surges in optimism as well as pent-up demand are clearly revealing themselves in economic data.

As job growth becomes even stronger, an increase in household formations can be expected as younger cohorts leave family residences and workers become more mobile again. The continued run-up in house prices, low supply and increasing mortgage rates will temper the for-sale market, resulting in healthy demand for apartments, particularly in suburban locations in the South and West. While it appears that gateway cities have hit bottom, supply and demand imbalances will prolong their recoveries. And until rental assistance dollars are fully distributed, risks remain for small property owners and their residents.  


With COVID-19 cases higher in some states than they were in April and May—originally anticipated to be the peak—the pandemic is far from contained in the United States. Until consumers and businesses alike hear some good news about containment, treatments and vaccines, fits and starts can be expected to plague economic activity.

Between consumers’ savings and additional income, it should come as no surprise that rent collections being reported by several property management firms for institutional-grade properties remained strong through July. But the combination of dwindling savings and the supplemental federal unemployment insurance expiring at the end of July bodes poorly for rent collections in September and beyond.

June 21, 2021
Special Reports
NAA Inflation Tracker

While most economists and analysts expect rising inflation to be a temporary phenomenon, concerns continue to mount from businesses and consumers alike. With that in mind, the National Apartment Association (NAA) is launching an inflation tracker to keep its members informed and help them cut through noisy data—a result of uncharted territory created by the pandemic.  

CPI, Latest Release, May 2021 4.9%

On a year-over-year basis, the Consumer Price Index (CPI) rose by its highest rate since 2008. It is important to note that part of this increase stems from the base month comparison of May 2020, when the Index was still declining in the wake of pandemic shutdowns.

Core CPI, which excludes volatile food and energy prices, rose to its highest level since 1992. Of the core components, some of the largest price increases were for used cars and trucks, car and truck rentals, airfares and car insurance. Demand for some of these items one year ago was nearly non-existent and prices adjusted accordingly. In the case of the auto insurance industry, many companies lowered their premiums to reflect decreased auto usage among those no longer commuting to work. In the case of used cars and trucks, demand has increased due largely to the semiconductor shortage plaguing the auto industry.

Alternative Measures of Inflation, May 2021

The Federal Reserve Bank (FRB) of Atlanta uses measures of inflation it refers to as “Flexible CPI” and “Sticky CPI,” basically categorizing CPI components by price volatility. Goods and services with sticky prices do not typically respond to changing market dynamics quickly – think rent, education and public transportation. Flexible prices change far more frequently and often wildly – think gas, food and hotels.

FRB Atlanta estimates sticky price goods and services comprise 70% of headline CPI and says these prices present a more forward-looking approach to inflation. Not surprising, sticky price CPI is a smoother data series over time, and between 2014 and December 2020, has consistently been above 2%. 

Alternative Measures of Inflation, April 2021

The Personal Consumption Expenditures (PCE) Index is the measure of inflation the Federal Reserve Bank uses in its policy decisions. It is produced by the Bureau of Economic Analysis and uses different formulas, different weights and has a different scope compared to the Bureau of Labor Statistics’ (BLS) CPI. 

Although the two often track closely, April (the most recent data available) was the first time PCE rose above the Fed’s 2% long-term average target since December 2018. CPI, on the other hand, rose above 2% for 15 months during that same time period. At its current rate of 3.1%, it would take 11 months for the PCE to achieve a five-year average of 2%.

The Producer Price Index, April 2021

While lumber prices grab all the headlines, the BLS aggregates all construction inputs excluding capital investment, labor and imports for single-family and multifamily construction. Price increases for construction inputs have experienced double-digit growth for three consecutive months for both housing sectors.

Wage Growth, May 2021

Wage growth has been nothing but volatile during the past 14 months, spiking to 8.2% in April 2020, a reflection of lower-wage workers losing their jobs - and plummeting to just 0.4% in April 2021 as lower-wage workers were re-employed. Wage growth in May was moderate at 2% as lower-paying jobs continued to be filled. With job openings at an all-time high and widespread reports of hiring challenges across industries, more substantial increases in wages are expected in the coming months.

What to Watch Next Month

CPI began to increase again in June 2020, so base effects should start to ease. However, the timing for resolutions of supply-chain bottlenecks remains an unknown. And with summer upon us and the U.S. inching ever closer to 70% of its population being at least partially vaccinated, demand for goods and services is expected to stay elevated, resulting in further price pressures.

Next Tracker: July 13, 2021

June 11, 2021