While higher than pre-pandemic levels, rent growth over the past six years has lagged behind both overall inflation and home prices, according to the Realtor.com May Rent Report.
In May, the median rent was $1,705, up 19.6% compared with the same time in 2019, which is below the 25.6% rise in consumer prices. With market-based rents continuing to cool, Americans can expect further relief in shelter inflation in the months ahead, Realtor says.
“Falling median asking rents are an encouraging sign that relief is on the way for shelter inflation, which has been one of the largest contributors to elevated consumer prices,” says Danielle Hale, chief economist at Realtor.com.
“Because shelter costs tend to lag behind real-time market trends, the sustained slowdown in rent growth is likely to show up in the Consumer Price Index in the months ahead, helping to ease overall inflation pressure. While this is an encouraging sign, for most major U.S. metros rents are still considerably higher than before the start of the pandemic, and despite 22 consecutive months of year-over-year declines, the U.S. median rent was just $54 less than the peak seen in August 2022.”
Comparing rent growth to U.S. inflation offers context to affordability that can highlight where local housing costs are rising faster than residents’ overall cost of living. According to Realtor, there are just nine metro areas where rent growth has outpaced inflation since 2019. These include Indianapolis; Jacksonville, Florida; Kansas City, Missouri; Miami; New York; Pittsburgh; Sacramento, California; St. Louis; and Tampa, Florida.
The majority of U.S. metros saw median rents pace below inflation. San Francisco, where rents have declined 3.2% since 2019, saw the biggest gap compared with inflation, followed by Minneapolis (3.9%); Oklahoma City (7.7%); Seattle (7.9%); Denver (8.9%); and San Jose, California (8.9%).
Federal policy changes are impacting rental markets across the country, Realtor points out. New restrictions on international student visas are expected to reduce rental demand in international student hubs. These metros have already shown signs of cooling, with year-over-year rent declines in four of the five markets with the highest shares of international students: Miami (-2.7%), Seattle (-2.3%), Orlando (-1.1%), and Boston (-0.4%).
Additionally, markets tied to federal employment are feeling the impact. In cities like Washington, D.C. (1.3%) and Baltimore (0.3%), rents edged up in May, while other federal hubs such as San Diego (-5.9%); Virginia Beach, Virginia (-2.5%); and Oklahoma City (-1%) saw rent declines. The mixed results reflect the push-pull effects of federal job cuts and return-to-office mandates, Realtor says.
Now doubled steel and aluminum tariffs are pushing up construction costs, especially in metros like Milwaukee; Memphis, Tennessee; and Columbus, Ohio. Four of these key metros saw year-over-year rent declines in May, including Milwaukee (-0.5%), Oklahoma City (-1.0%), Cleveland (-1.9%), and Memphis, Tennessee (-3.3%). Columbus, Ohio, saw a modest 0.2% growth.
