After months of housing market moderation, new reports suggest that the rental market is finally starting to follow suit.
A recently released Apartments.com report shows that monthly rents grew by 7.1% in August—down from 8.4% at the end of July. The deceleration not only breaks a near two-year streak of rent cost hikes, but it is also the first sign of a cooldown in the market, which has strained renters with few alternatives amid surging housing costs.
Experts at Apartments.com state that rental market conditions indicate a downshift in the spring and summer leasing periods compared to pre-pandemic historical results.
Rental markets in Sunbelt states underwent some of the most dramatic pullbacks, especially areas that saw the fastest rent spikes last year. This includes Nashville, Austin and San Francisco, which saw the most significant declines out of the list of the 40-largest markets tracked by Apartments.com.
Average rents fell 1.1% last month in Nashville, while Austin followed with a 1% drop. Las Vegas, Raleigh and Orlando joined the Sunbelt cities with significant rent decreases.
Key takeaways:
- Annual rental growth remains positive but is slowing—from 8.4% in July to 7.1% in August.
- The Sunbelt markets saw the most dramatic pullbacks.
- Thirteen out of the 40 largest markets saw monthly rents hold positive or at zero in August.
- In absolute terms, San Francisco rents declined the most in the past 30 days, down $29 or 0.9%.
- Nashville led in percentage change, down 1.1% or $18.
What this means:
“After a 20-month run of positive monthly growth dating back to December 2020, the market finally witnessed negative asking rent growth on a monthly sequential basis from July to August, with rents down 0.1% in July,” said Jay Lybik, national director of multifamily analytics, CoStar Group. “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to now new deliveries outpacing lackluster demand.”
