Renters got their fifth straight month of good news in September as rent prices fell again.
According to a report released Monday by Realtor.com, rents for studio, one-bedroom and two-bedroom units fell 0.7 percent between August and September, with median rents in the 50 most populous United States cities hitting $1,747, down $29 from the peak seen in July 2022.
“As rents ease and both home prices and mortgage rates continue to climb, it’s become more economical to rent than to buy in nearly all major markets,” said Realtor.com Chief Economist Danielle Hale.
The report attributed the slight dropoff in rent prices to more newly constructed apartments becoming available but noted that these are being snatched up quickly — especially more affordable units.
“Even with an influx of new apartment units coming onto the market and putting a lid on rent growth, renters are claiming these new apartments faster than prior to the pandemic,” Hale said. “Those considering new housing options will want to do their research on their desired neighborhoods, determine their priorities, and set their budget well ahead of time if possible, so they’re ready to move quickly when the time comes.”
September saw the annual completion rate of multi-family buildings with five or more units increase 10.1 percent month over month and 15 percent year over year, and renters moved just as fast to sign leases, especially for more affordable units.
The absorption rate for affordable rental units — those renting for $1,850 or lower — was 69.8 percent within three months of completion. Within the same timeframe, 57.2 percent of those priced over $1,850 were rented.
Rental units of all sizes registered declines, with median rents for two-bedroom units dropping 0.7 percent in September, rents for one-bedroom units falling 0.3 percent and rents for studio apartments falling 0.5 percent. While rental prices for units of all sizes are elevated from their pre-pandemic levels, larger-sized units are the most elevated, with two-bedroom apartments renting for $403 more per month than they did four years ago according to the report.
The cities leading the nation in rental growth were more affordable Midwestern cities, with Milwaukee experiencing 3.9 percent year-over-year rental price growth, Cleveland hitting 3.6 percent, and Indianapolis logging 3 percent.
Big Western cities meanwhile saw the steepest year-over-year decreases, with rents in San Francisco falling 4.8 percent year over year and Los Angeles seeing rents fall 3.4 percent. Those same cities saw a higher absorption rate for new apartments, suggesting greater demand for cheaper apartments, the report said.