Rents continue to cool, dropping for the sixth month in a row nationwide, and providing a bit of relief to renters.
The national median price of rent for apartments ranging from studios to two-bedroom apartments fell 0.3% year-over-year to in January. That’s down $5 from a year ago and $46 below the high in August 2022, according to Realtor.com.
Still, prices are over 18% higher than pre-pandemic levels, due to continued strong demand and limited supply in some markets.
The national median rent for a two-bedroom apartment was $1,892 in January, down 0.6%, while rent for a one-bedroom was essentially flat at $1,591. Rent for a studio dropped the most, falling 1% from a year ago to $1,434.
In the West, rents are beginning to rebound after dropping, largely because of such high demand for rentals from people who might rather be purchasing a home if it weren’t financially out of reach.
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Rent in Phoenix was down 4% and Las Vegas was down 1.8%. But in places like Los Angeles, and Seattle, they’re up 0.2% and 1.3%.
Rents grew in the Midwest, which is among the most affordable parts of the country, with rents in Chicago up 4.2% from a year ago. Indianapolis and Kansas City, Missouri also saw increases of 3.5%, and 3.1%, respectively.
Still, even with the uptick, Chicago’s median rent of $1,852 is almost $1,000 less than coastal big cities like New York at $2,844 and Los Angeles at $2,829.
These Midwest markets have lower unemployment, which keeps rental demand strong, and they remain affordable in comparison with other parts of the country, according to the report.
Meanwhile, the South has seen a lot of new construction coming to market, with the median asking rent falling by 1.2% from a year ago.
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Memphis, Tennessee saw rents drop 5.5% to $1,247, followed by Atlanta, down 3.8% to $1,619, Austin, Texas down 3.6% to $1,547 and St. Louis, Missouri down 3.6% to $1,295.
In Miami, where rents soared over the past four years, rents were 3.4% lower to $2,373 compared to a year ago.
Like the Midwest, unemployment in the South is also low. But the supply of new multifamily housing is growing, which helps to bring down rental prices, according to the report.
Rents continue to rise in big Northeastern metros such as New York, where rent surged 2.3% and Boston, up 2.7%. In these dense areas, labor markets are strong, and it is very difficult to build new apartment stock, which keeps rents higher.
“Rental prices are declining, especially in places where new units are entering the market, but there’s still plenty of demand driven by the large population of renters, including potential first-time homebuyers who remain on the sidelines for now,” said Danielle Hale, chief economist at Realtor.com, in a release.
She said she anticipates the rental market will only cool slightly this year.
That’s because, on one hand, Hale said, a multifamily building boom in some places over the past few years has reduced competition for apartments and kept rent from rising as fast as it has in recent memory.
But on the other hand, she said, the demand for rental housing is still incredibly strong. This is especially due to frustrated would-be homebuyers who continue renting. Renting is more affordable than buying a home right now, especially as the cost of homeownership remains high and the inventory of entry-level homes is low.