For the last four years the skies of major U.S. metropolitan housing markets have been littered with cranes.
As the homeownership rate fell following the recession, the towers rose — the vast majority boasting luxury rentals, complemented by high-end amenities like rooftop dog parks, fitness centers, private movie theaters and party rooms.
Now all that construction has largely come on line, and sky-high rent growth is officially shrinking.
"The group is slowing," said Alexander Goldfarb, a multifamily REIT analyst with Sandler O'Neill. "2015 was abnormally strong with a re-acceleration after recession. This year was the give back."
The average rent nationally in the third quarter was $1,289 per unit per month, compared with $1,251 in the third quarter of 2015. While that was a 3 percent annual increase, it was more than 2 percentage points below the 5.2 percent rent growth of one year ago, according to Axiometrics, a provider of apartment and student housing market intelligence. This drop is being driven almost entirely by cooling on the luxury end.