Here’s some good news for renters: Rents are still trending in the right direction—and have fallen for the 15th month in a row.
The average asking rent in the 50 largest metros registered at $1,720, down $23 from last month and $40 from its peak in August 2022, notes Realtor.com economist Jiayi Xu in the October Rent Report 2024.
While the declines have been modest — this month they were down just $9 year-over-year — it’s a welcome relief for anyone looking for a place to call home.
However, even with this downward trend, rents remain higher than they were before the COVID-19 pandemic. Compared to October 2019, the average asking rent is $272 higher, showing how much the rental market has transformed over the past few years.
However, this could change due to a gain in housing stock.
Why did rents go up in the first place?
Chalk the overall increase in rents over the past few years to inflation. Over the past five years, the real estate inflation rate has increased by 18.8%. While this is slightly lower than the overall consumer price inflation rate of 22.7%, it is still enough to keep rents high.
And while rents have risen, their increases have been relatively mild compared to homes for sale. In the same five-year period, the average price per square foot of home listings for sale increased by 50.5%.
And now, rental prices are starting to cool further, especially for smaller apartments. Studio and one-bedroom units saw the biggest price drops, with year-over-year declines of 1.2% and 0.9% respectively.
What is behind this change? A much needed increase in housing supply.
More housing stock is cooling the market
The rental market is finally reaping the benefits of construction projects that started during the pandemic.
“Regionally, all four areas saw significant growth in multifamily completions in 2024, driven by increases in new starts from previous years,” says Xu.
Between January and September 2024, the average annual rate of multifamily home completions reached 606,000 units, an increase of 36.1% compared to the same period in 2023.
This growth is particularly evident in the South, where multifamily housing completions have skyrocketed.
The region saw a 49.1% increase in home completions between January and September 2024 compared to the same period in 2023, and a staggering 76.6% increase compared to pre-pandemic levels in 2019.
The Sun Belt adds more rent
During the pandemic, remote workers flocked to Sun Belt cities, driving up demand and rental prices.
Between February 2021 and February 2022, these metros saw average rent growth of 22.5%. Developers responded quickly and between January and September 2023 alone, more than 823,000 homes were completed in the region.
Now, the growth of new housing stock in the South is helping to soften the competitive rental market, especially in popular cities like Miami, Austin, TX and Memphis, TN. Rents there fell by 1.3%, 4.2% and 5.4% respectively.
While rents remain higher than pre-pandemic levels, the increased supply is starting to ease the pressure on renters, making these cities more accessible overall.
“Faster growth in lease terminations in the South has boosted rental supplies and lowered the typical rental price of available homes in October compared to a year ago,” Xu says.
An increase in rentals to choose from is not limited to the south.
“The South witnessed the most significant growth in new completions between January and September 2024, with a year-over-year growth rate of 49.1%, followed by the Midwest (44.9%), the West (23.9%) and the Northeast (7.4%). ” says Xu.
Below, see the 10 US metros where rents have fallen the most.
Change per year (0-2 bedrooms): -5.6%
Average rent (0-2 bedrooms): $1,836
Annual change (0-2 bedrooms): -5.4%
Average rent (0-2 bedrooms): $1,204
Year change (0-2 bedrooms): -5.2%
Average rent (0-2 bedrooms): $1,556
Change per year (0-2 bedrooms): -4.3%
Average rent (0-2 bedrooms): $1,462
Annual change (0-2 bedrooms): -4.2%
Average rent (0-2 bedrooms): $1,495
Change per year (0-2 bedrooms): -4.1%
Average rent (0-2 bedrooms): $1,780
Change per year (0-2 bedrooms): -4.1%
Average rent (0-2 bedrooms): $1,250
Change per year (0-2 bedrooms): -4.5%
Average rent (0-2 bedrooms): $1,512
Annual change (0-2 bedrooms): -3.8%
Average rent (0-2 bedrooms): $1,520
Annual change (0-2 bedrooms): -3.4%
Average rent (0-2 bedrooms): $1,583
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Image Source : nypost.com