Rents declined in March for the eighth consecutive month, with year-over-year prices dropping by -0.3% and declines seen across all unit sizes, according to the Realtor.com Rental Report released today. Even so, the median rent of$1,722was only$36less than the peak seen inAugust 2022and was$313more than inMarch 2019, before the pandemic, pointing to a resilient rental market.
Top 10 markets with the largest yearly rent price declines include:Austin-Round Rock, Texas (-4.70%);Memphis, Tenn.-Ms.-Ark. (-4.40%);St. Louis, Mo.-Ill. (-4.00%);Atlanta-Sandy Springs-Roswell, Ga(-3.70%);Miami-Fort Lauderdale-West Palm Beach, Fla.(-3.60%);Phoenix-Mesa-Scottsdale, Ariz.(-3.20%); Nashville-DavidsonMurfreesboroFranklin, Tenn. (-2.90%);Orlando-Kissimmee-Sanford, Fla.(-2.80%);Tampa-St. Petersburg-Clearwater, Fla. (-2.50%); andCleveland-Elyria, Ohio(-2.50%).
"Rising shelter costs have been a major driver of overall inflation, a top concern for the Fed as it meets this week," saidDanielle Hale, Chief Economist at Realtor.com . "There is some good news for renters with prices falling in many parts of the country, especially outside expensive metro markets in the West and Northeast. However, we expect cost pressures to continue as interest rates remain high and would-be buyers opt to rent instead and keep demand high. New housing construction is needed, especially in major markets in the Northeast and West, to alleviate the home supply shortage . Softer rents in the South are evidence that more supply helps tame rising costs."
Rents in Midwest held steady amid rising unemployment, declined in the South
March rents in the Midwest were flat, though there was strong growth inChicago(4.3%),Kansas City, Mo.(3.4%), andIndianapolis(3.3%). Midwest markets have remained more affordable, with median rent inChicago($1,846), for example, more than$1,000less than inNew YorkandLos Angeles. Still with unemployment rising in the Midwest, rental prices could slow or decline there. In the South, meanwhile, the median asking rent fell by -1.5% from a year ago. The biggest drops occurred inAustin, Texas(-4.7%),Memphis, Tenn.(-4.4%),Atlanta(-3.7%),Miami(-3.6%) andNashville, Tenn.(-2.9%). Unemployment is low and demand for rental housing was strong, but an influx of new units has helped push down rental prices.
Rents in the West saw new growth, while expensive Northeast markets continue to climb
The median asking rent in the West rose by 0.4% from a year ago, the first annual increase after 13 months of declines. Increases came in expensive metro areas such asSan Diego(2.9%) andLos Angeles(1.6%), as more potential first-time buyers opted for renting in the face of high home prices and the expectation that mortgage rates will remain elevated in the near future. Unemployment rates in the West rose, potentially forcing some people to postpone buying plans and pushing up rental rates although if labor market conditions deteriorate, more people may leave the area entirely. Some Western metros saw declines in rent, includingPhoenix(-3.2%) andDenver(-1.9%). Expensive Northeastern metros continued to see an even faster pace of rent growth, with median rents inNew Yorkrising by 3.8% and inBostonby 3.3%. Labor markets in the region remain relatively robust, and demand for rental housing is outstripping supply.
Amid general drop in rents, studios saw biggest decline
In March, units of all sizes saw median rent declines, with studios showing the largest drop (-1.4%) on a year-over-year basis, to$1,435. It was the seventh consecutive month of rent declines for studios, though the median asking rent is still 17.6% higher than five years ago. Median asking rents for one-bedroom units declined by -0.1%, to$1,602. That relatively small drop may be because one-bedroom units are an alternative to both smaller and larger units. Meanwhile, rents for two-bedroom units declined by -0.5% to$1,908, the eighth consecutive month of year-over-year decline. These units still had the highest growth rate over the past five years, up by$372(24.2%).
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