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Rent was 4.8 percent higher in December than the same time a year before, Redfin reported on Thursday.
While that’s still above historical norms, it’s the smallest increase since June 2021. Median asking rent in the nation’s 50 largest markets climbed to $1,979 last month.
That’s down 3.6 percent from a peak of $2,053 per month in August, while December closed as the seventh-straight month that saw a slowdown in rent growth compared to the prior year. That slowdown is expected to continue.
“Rents have room to fall,” Redfin economics research lead Chen Zhao said in a statement. “While they’ve cooled significantly from their peak, it still costs the typical renter 20 percent more to take on a new lease than it did two years ago.”
The incoming glut of apartments in some markets could cause a further drop in rent, according to Zhao.
“An increase in the number of rentals on the market should also cause rents to ease in the coming months,” Zhao said. “Rental supply is growing due to an influx of construction in recent years, ebbing household formation and a slow homebuying market, which is driving many homeowners to rent out their properties rather than sell.”
Other recent reports have found that renters are simply staying put amid ongoing economic uncertainty.
The historically high rent prices and slower sales market have some homeowners deciding to rent rather than trying to sell, a prospect that could come with a drop in the home’s price, a Redfin agent said.
“A lot of sellers are turning to the rental market because they’re still having trouble wrapping their heads around the fact that they’re not going to get sky-high offers like they would have at the height of the pandemic homebuying frenzy,” said Josh Felder, a Redfin real estate agent in the Bay Area. “Some sellers are reluctant to drop their price, even when their home has been sitting on the market for a long time. I’ve had two sellers recently decide to rent out their homes because they couldn’t get the price they wanted. Both homes were listed for over $2 million.”
If sellers are indeed deciding to capitalize on high rent prices and avoid a slow buyer’s market by renting their homes out, it would be the latest indicator of a recent trend.
Year-over-year median asking rent declines
- Minneapolis: -8.5 percent
- Oklahoma City: -6.4 percent
- Phoenix: -5 percent
- Houston: -4.6 percent
- Milwaukee: -4.1 percent
Year-over-year median asking rent increases
- Salt Lake City: 29.8 percent
- Raleigh: 24 percent
- Indianapolis: 16.3 percent
- Cleveland: 14.6 percent
- Nashville: 11.7 percent