Rents across the U.S. has continuously declined throughout 2023 thanks to the influx of new multifamily apartments hitting the market and subsequently exerting downward pressure on prices.
However, it’s only providing modest relief for renters. Rates are still well above pre-pandemic levels and Realtor.com chief economist Danielle Hale doesn’t expect them to return to that level in the future either.
“I do expect slowing rents, but I don’t expect that magnitude of decline,” Hale told FOX Business.
Data from Realtor.com’s latest report showed how December marked the eighth straight month of year over year price declines in the rental market thanks in part to the “building boom” in recent years.
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In the 50 largest metros across the U.S., the median asking rent for properties across all sizes fell to $1,713 in December, down 0.4% year over year. That’s also down 3.5% from its July 2022 peak. However, studios saw the biggest drop, slipping 1% year over year to $1,437.
Even with these declines, the median asking rent is still 22% higher compared to the same time in 2019, underscoring the significant price pressures renters continue to face.
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According to the data, median rent within Western and Southern metros saw notable declines due to the fact that supply outstripped demand. In the West, median rent was down 1.6% last month compared to a year earlier. Major metros such as San Francisco and Los Angeles saw annual declines of about 2.8% and 3.5%, respectively, according to the report.
In the South, the data showed that the median asking rent for properties slipped 0.5% compared to a year ago. Orlando, Florida, and Austin, Texas, saw the most significant declines last month at 6.2% and 5.4%, respectively.
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By contrast, the Northeast and Midwest faced sustained rent growth given that there was more rental demand than supply.
Though prices are still elevated, Hale anticipates “continued weakness in the rental market” as more supply comes on the market.
Rents are likely to grow at a slower than usual pace for a few years, which will be a relative reprieve.
For 2024 in particular, they are projecting rents to see an average decline of 0.2%, which is slightly lower than what we have see in prior months.