Despite the challenges, the median U.S. asking rent showed resilience, increasing by 0.8% year-over-year in May 2024, reaching $1,653, the highest level since October 2022. This marks the second consecutive month of rising rents, following a 0.9% year-over-year increase in April, after 11 months of declines. On a month-over-month basis, rents rose by 0.5%.
The dynamics of apartment pricing are closely tied to supply. During the pandemic, a surge in multifamily construction led to a competitive rental market, driving down prices. Although multifamily housing starts have recently dipped below their 10-year historical average, a backlog of new units continues to enter the market monthly, curbing significant price increases.
“Demand from young renters remains high, as many are choosing to stay in the rental market due to the increasingly unaffordable home-buying landscape,” said Redfin Senior Economist Sheharyar Bokhari. “However, rent price growth has been tempered by the availability of new apartments, even during the peak rental season.”
While May’s asking rents have increased, they remain stable compared to recent years. However, May’s median asking rent was just $47 (2.8%) below the August 2022 record high of $1,700, presenting affordability challenges for some renters. This underscores the need for continued monitoring and potential interventions to ensure housing affordability for all.
Regional rent trends varied significantly. Washington, D.C. experienced the largest increase among major U.S. metropolitan areas, with the median asking rent rising 11.1% year-over-year in May. Other metros with double-digit gains included Cincinnati (10.9%), Chicago (10.8%), Virginia Beach, VA (10.3%), and Minneapolis (10.3%).
Conversely, the largest declines in asking rents were observed in Jacksonville, FL (-10.1%), San Diego (-8.7%), Austin, TX (-7.2%), Seattle (-5.9%), and Phoenix (-5.5%). The Sun Belt, in particular, has seen a decline in rents due to extensive apartment construction aimed at meeting pandemic-driven demand. As the pandemic housing boom wanes, property owners in this region are now facing increased vacancies, leading to cooling rents.
Meanwhile, many Midwest metropolitan areas are experiencing rising rents due to a slower pace of apartment construction. The Midwest remains the most affordable region in the U.S., which boosts demand amid widespread housing affordability challenges.
