With year-over-year prices dropping by -0.3% and declines seen across all unit sizes, rents continued to fall in March for the eighth month in a row, according to the Realtor.com Rental Report.
Pointing to a resilient rental market, the median rent of $1,722 is only $36 less than the peak seen in August 2022 and is $313 more than in March 2019.
Austin-Round Rock, Texas (-4.7%); Memphis, Tennessee-Mississippi-Arkansas (-4.4%); St. Louis, Missouri-Illinois (-4%); Atlanta-Sandy Springs-Roswell, Georgia (-3.7%); Miami-Fort Lauderdale-West Palm Beach, Florida (-3.6%); Phoenix-Mesa-Scottsdale, Arizona (-3.2%); Nashville-Davidson–Murfreesboro–Franklin, Tennessee (-2.9%); Orlando-Kissimmee-Sanford, Florida (-2.8%); Tampa-St. Petersburg-Clearwater, Florida (-2.5%); and Cleveland-Elyria, Ohio (-2.5%) were the top 10 markets with the largest annual rent price declines.
"Rising shelter costs have been a major driver of overall inflation, a top concern for the Fed as it meets this week," says Danielle 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."
In the Midwest, March rents were flat, though there was strong growth in Chicago (4.3%); Kansas City, Missouri (3.4%); and Indianapolis (3.3%). Midwest markets have remained more affordable with median rent in Chicago at $1,846. Yet with unemployment rising in the region, rental prices could slow or decline.
Meanwhile, in the South, the median asking rent fell by -1.5% from March 2023. The biggest drops were seen in Austin (-4.7%); Memphis (-4.4%); Atlanta (-3.7%); Miami (-3.6%); and Nashville (-2.9%). Unemployment is low and demand for rental housing was strong, but an influx of new units has pushed down rental prices, Realtor notes.
The West’s median asking rent increased by 0.4% from a year ago, the first annual increase after a 13-month decline. Increases came in expensive metro areas such as San Diego (2.9%) and Los Angeles (1.6%). Unemployment rates in the West rose, potentially forcing some people to postpone buying plans, which pushed up rental rates. If labor market conditions deteriorate, more people may leave the area entirely, Realtor says. Some Western metros saw declines in rent including Phoenix (-3.2%) and Denver (-1.9%).
Pricey Northeastern metros continued a faster pace of rent growth, with median rents in New York rising by 3.8% and in Boston by 3.3%. Labor markets in the region remain relatively strong, and demand for rental housing is outperforming supply.
While units of all sizes saw median rent declines in March, studios had the largest drop (-1.4%) on a year-over-year basis to $1,435. Marking the seventh consecutive month of rent declines for studios, 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. Rents for two-bedroom units declined by -0.5% to $1,908, registering 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%).
