In keeping with high home prices, the U.S. median asking rent grew by $4 to $1,734 in April, down $43 from its peak, according to a new report from Realtor.com.
Realtor.com’s April Rental Report found that this is the ninth month of single-digit growth in a row following a 15 month slowdown from the peak of 16.4% growth in January 2022. In addition, the median rent across the top 50 metros was up just 0.3% year-over-year, the lowest growth rate since the onset of the pandemic.
Key highlights:
- The rent growth of two bedroom units increased 0.9%, marking the slowest growth rate since the onset of the pandemic. This is the fourth straight month of positive rent gains in two-bedroom units on a monthly basis
- The median rent for two bedrooms was $1,936 nationally, $17 (0.9%) higher than the same time last year but still $32 lower than the July 2022 peak. Larger unit rents had the highest growth rate over the past four years, up by $430 (28.6%).
- Rent growth for one-bedroom units slid to 1.2%. The median rent was $1,618, at the same level as last month but still $34 less than the July 2022 peak.
- Nevertheless, the median one-bedroom rent is still up by $19 (1.2%) compared to the previous year and $327 (25.3%) higher since April 2019.
- Rent growth in studios dipped to 2.1%. As renters sought affordability, studio rents grew faster than larger 2-bedroom units over the last nine months.
- The median rent of studios was $1,444, down by $1 compared to last month. Still it’s up by $30 (2.1%) year-over-year and $243 (20.2%) higher than four years ago.
- One major factor contributing to lower rent prices is a significant increase in multi-family construction. This has helped the vacancy rate reach its highest level (6.4% in Q1 2023) in two years.
- As more new rental properties are added to the market, the vacancy rate could inch back toward the norms we saw in 2013-2019 (about 7.2%) and would improve affordability for renters.
- Despite more available rentals and slowing rent growth, average rent still costs $348 (25.1%) more than it would have at this time in 2019.
- Renters who renew their lease tend to pay less than those who sign a new lease. A 2022 survey from Avail, a Realtor.com business, found that renters signing a new lease reported a price increase of nearly 27%—about double what people who have been in their rental for 1-2 years experienced (13%).
Major takeaway:
“In April, we continued to see rising rent prices and a moderating growth rate. This is promising news for renters, suggesting that the pandemic peaks are behind us, and that the challenging affordability picture may begin to improve,” said Realtor.com Chief Economist Danielle Hale. “We’ve seen record-high new construction occurring in the multi-family space, which is creating more units, helping to reduce competition and in turn helping to ease prices.”
Added Hale, “Realtor.com monthly data is based on median asking rents rather than survey responses, which are used in the CPI Index, so CPI data lags behind what we’re seeing. The data suggest that easing in the cost of shelter is ahead in future CPI reports. While this could take until 2024 to play out significantly, it will be welcome news for renters and for overall inflation.”
For the full report, including data tables and regional data, click here.
