For the sixth consecutive month, rents have fallen, according to the monthly Realtor.com Rental Report. While still 18.3% higher than four years ago, prices are down 0.3% compared with January 2023.
The median asking rent for studio to two-bedroom units in the 50 largest metros declined to $1,712, down $5 from the previous January and $46 below its August 2022 high. Across unit sizes, median rents were mixed, Realtor.com notes.
Down 3.8% from its October 2022 peak but still 11.9% higher than four years ago, the median asking rent for studios fell by 1% in January, while asking rents for two-bedroom units declined by 0.6% to $1,892. Larger units saw the highest growth in rent prices over the past year at an increase of $321, or 20.4%, according to the report.
Asking rents for one-bedroom units recovered after declining since July 2023, increasing by 0.1% year over year to $1,591 in January. Demand for one-bedroom units may be fueled by the perception that they're a sweet spot in the market: more spacious than a studio and more affordable than a two-bedroom unit, Realtor.com says.
"Rental prices are declining, especially in places where new units are entering the market, but there's still plenty of demand driven by the large population of renters, including potential first-time home buyers who remain on the sidelines for now," says Danielle Hale, chief economist at Realtor.com.
"Looking forward, Realtor.com anticipates the rental market to decline only slightly in 2024, as an increase in the supply of new units is balanced out by continued enthusiasm for renting as a more affordable alternative to purchasing."
In Western metros like Phoenix (-4.0%), Riverside, California (-2.6%), and Las Vegas (-1.8%), median rent fell 0.3% compared with January 2023, while other large metros began to see rebounds. Los Angeles (0.2%) and Seattle (1.3%) posted year-over-year increases following eight straight months of decline, the report notes.
Where labor markets are strong and there is slow growth in new housing stock, rents are rising faster, especially in big Northeastern metros like New York (2.3%) and Boston (2.7%).
In the Midwest, asking rents increased by 0.2% in January, with Chicago (4.2%), Indianapolis (3.5%), and Kansas City, Missouri (3.1%) shining brightly.
The South experienced a decrease in median asking rent by 1.2%. Memphis, Tennessee (-5.5%), Atlanta (-3.8%), Austin, Texas (-3.6%), St. Louis (-3.6%), and Miami (-3.4%) recorded the largest year-over-year declines.
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