These 5 cities saw the steepest declines in rent prices last quarter as vacancies rose across the US

• Effective rent for multifamily units dropped in 76% of markets through the first quarter of 2023, according to Moody's Analytics.
• Over the last three months, vacancies in multifamily units saw their biggest jump over the past two years.

Apartment demand eased in the first quarter of 2023, with Moody's data showing rent prices declined as vacancies ticked higher by the steepest margin in two years.

To start the year, effective rents for multifamily units dropped in 76% of markets, according to a Monday research note from Moody's Analytics economists Lu Chen and Nick Luettke.

Nationally, asking and effective rent fell by 1% and 0.9%, respectively, which reduced the burden of rent and could help bring shelter inflation lower in headline CPI, the report said.

According to Moody's data, the cities leading the rent price declines included:

Fairfield County (-6.4%), Louisville (-3.6%), Greensboro/Winston-Salem (-3.3%), Syracuse (-2.8%), and Raleigh-Durham (-2.8%).

"'Pandemic fever' once fueled by discounted rental price and migration has gradually subdued as rent burden grew while economic growth and household formation slowed," the economists wrote. "Multifamily demand has softened notably over the past few quarters with net absorption even teasing slightly below zero in the first quarter of 2023."

Among 79 cities, 30 metros saw rents decline by at least 100 basis points, with 14 of them declining by more than 200 basis points.

Vacancies, meanwhile, ticked up by 13 basis points to end the quarter at 4.71%, Moody's said. That tops the pre-pandemic vacancy level of 4.68%.

Last quarter's downward move in rents comes after nine consecutive interest rate hikes from the Federal Reserve dating back to last year, which has resulted in higher borrowing costs as well as interest rate volatility across markets.

Meanwhile, on March 30, Freddie Mac reported that mortgage rates declined for the third consecutive week, with the 30-year fixed-rate mortgage hitting 6.32%.

"Over the last several weeks, declining rates have brought borrowers back to the market but, as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers," Freddie Mac economists said.