Jul 25, 2023
Renters across the nation are seeing a glimmer of hope as rents continue to drop, but the relief may not be enough to ease their financial burden. In June, rents declined by 1% year over year, with the median rent in the 50 largest housing markets reaching $1,745 per month, according to a recent Realtor.com® report. While this marks the second consecutive month of rent decreases, the decline from last July's peak was a mere $31. However, renters are still grappling with monthly bills that are approximately 24% higher than pre-COVID-19 levels in June 2019, amounting to an additional $339 per month.
Realtor.com's analysis encompassed rents for various types of housing, including studios, one-bedroom and two-bedroom apartments, condos, townhomes, and single-family homes across the 50 largest metros. Despite the marginal relief, affordability remains a significant challenge for renters, as rental prices remain substantially high. The good news, though, is that a record number of approximately 1 million apartments are currently under construction. This surge in supply might compel landlords to adjust their pricing to attract tenants, potentially leading to further declines in rents, albeit modest ones.
Curiously, renters are opting for smaller spaces in their pursuit of cost savings. The demand for studios, typically the most budget-friendly option, remained strong, resulting in a 1% increase in rents for these units, reaching about $1,445 per month in June. Meanwhile, rents for one-bedroom and two-bedroom apartments dipped by 0.7% and 1% respectively. Nationally, renters paid approximately $1,630 per month for one-bedroom apartments and $1,945 for two-bedroom units.
Geographically, the Midwest saw a surprising rise in rental prices, up by 3.2% year over year in June, making it the cheapest region in the nation. Conversely, rents declined in the more expensive regions, with the West experiencing a 3.8% drop. Notably, some cities that had experienced significant rent increases during the pandemic, such as Austin, TX, saw sharp declines in rental prices. Austin experienced an 8.6% decrease in rents, with a median of $1,868 per month.
While the rental market shows signs of cooling in various regions, rental affordability remains a complex issue that requires ongoing attention from policymakers and stakeholders. The Midwest's strong labor market and greater affordability are driving demand in that region, but addressing the broader affordability concerns requires a multi-faceted approach to ensure renters can find housing that meets their financial needs.