Renters are finally getting a break on their rent as prices drop. The median asking rent rose 1.7% year over year to $1,937 in February—the smallest increase in nearly two years and the lowest level in a year, according to a new report from Redfin. Rents were up nearly 10 times that much (16.5%) a year earlier.
February was the ninth straight month where rent growth slowed on a year-over-year basis. Rents fell 0.3% from a month earlier. Still, the median asking rent remained 21.4% higher than it was in February 2020, the month before the coronavirus was declared a pandemic.
Rent growth has cooled as persistently high housing costs, inflation, recession fears and a slowdown in household formation have made people less likely to move, putting a damper on demand for new leases. A jump in supply due to a boom in apartment construction has also contributed to the slowdown in rent growth. The number of apartments under construction is up 24.9% year over year to 943,000, the highest level since 1974, according to a recent report from the National Association of Home Builders.
“Landlords are slowing their roll on rent increases because they’re grappling with a rise in vacancies as an influx of new apartments hits the market and demand slows from its peak,” said Redfin deputy chief economist Taylor Marr. “Rents are likely close to hitting a floor, though. That’s because stubbornly high inflation is boosting expenses for landlords, so instead of dropping rents they may seek to lure renters with other concessions, like free parking or a discounted security deposit.”
Marr added, “While rent growth has slowed, it hasn’t slowed quite as much as expected—in part because the labor market has held up better than anticipated, which has helped prop up demand. This is likely a reason overall inflation remains stubbornly high, as rent growth is a major contributor to inflation.”
Rents declined in 11 major metro areas
- Austin, Texas (-6.5%)
- New Orleans (-6.4%)
- Phoenix (-4%)
- Minneapolis (-3.5%)
- Dallas (-2.6%)
- Baltimore (-2.2%)
- Houston (-1.9%)
- Birmingham, Alabama (-0.5%)
- Chicago (-0.5%)
- Denver (-0.3%)
- Virginia Beach, Virginia (-0.2%)
Charlotte, North Carolina and Columbus, Ohio saw the largest rent increases
- Charlotte, North Carolina (14.3%)
- Columbus, Ohio (12.6%)
- Milwaukee (9.5%)
- Nashville (9.0%)
- Indianapolis (8.5%)
- Kansas City, Missouri (8.3%)
- Hartford, Connecticut (6%)
- Buffalo, New York and Providence, Rhode Island (5.9%)
- Cincinnati, Memphis and Louisville, Kentucky (5.5%)
- Riverside, California; San Diego (5.3%)