In September, an uptick in multifamily home
construction drove price declines, while quick absorption signals
still-high demand from renters, especially for more affordable
units
SANTA
CLARA, Calif., Oct. 23,
2023 /PRNewswire/ -- The Realtor.com®
September Rental Report revealed the housing market balance
continues to tip in favor of renters amid an uptick in
construction rates of multi-family homes, which helped push
down rents for 0-2 bedroom properties (-0.7%) for the fifth
consecutive month. Meanwhile, compared to pre-pandemic years,
faster absorption rates of newly constructed apartments within the
first three months after completion signal strong renter demand,
particularly for lower-priced units.
In September, median asking rents in the 50 largest metros
dropped to $1,747, down $29 from the peak seen in July 2022. Rent prices, while still significantly
higher than pre-pandemic levels, dipped on an annual basis for
units of all sizes.
"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 Danielle
Hale, Chief Economist at Realtor.com®. "However,
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. 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 2023 Rental Metrics by
Unit Size – National
Unit Size
|
Median Rent
|
Rent YoY
|
Rent Change – July 2019
|
Overall
|
$1,747
|
-0.7 %
|
24.0 %
|
Studio
|
$1,447
|
-0.5 %
|
17.5 %
|
1-bed
|
$1,630
|
-0.3 %
|
24.0 %
|
2-bed
|
$1,934
|
-0.7 %
|
26.3 %
|
Rent prices continue downward trend for units of all
sizes
In September 2023, rental
affordability continued to improve, although rent prices remained
well above pre-pandemic levels. Median asking rents for two-bedroom
units dropped for the fifth consecutive month (-0.7%), followed by
a fourth straight month of declines for one-bedroom units (-0.3%)
and a third consecutive month for studios (-0.5%). Median asking
rents for larger units remain the most elevated from pre-pandemic
levels, with two-bedroom units renting for $403 more per month than they did four years ago.
Meanwhile, rents for studios are dropping at a slightly faster pace
year-over-year than larger one-bedroom units.
As inventory rises nationwide, renters quickly claim
affordable units
While a near-record-high number of new apartment units coming
into the market is helping drive down rent prices, these units are
being absorbed swiftly by renters, signaling robust rental demand.
In September 2023, the annual
completion rate of multi-family buildings with five or more units
increased 10.1% month over month and 15.0% year over year. Renters
are moving particularly quickly on affordable units. The absorption
rate for affordable rental units – those renting for $1,850 or lower, approximately 30% of the median
household income – was 69.8% within three months of completion.
Within the same timeframe, 57.2% of those priced over $1,850 were rented.
As renters across the country move more quickly on new
multifamily construction, absorption rates within three months
after completion (for apartments built in the first quarter of
2023) exceeded pre-pandemic levels in all four regions. The Midwest
experienced the most significant increase in absorption rates
within this window, likely due to greater affordability, although
increasing demand may begin to erode those savings.
More affordable Midwest metros lead growth in rent
prices
Among the top 10 metros experiencing the fastest year-over-year
rent growth, four are in the Midwest: Milwaukee (3.9%), Cincinnati (3.6%), Cleveland (3.2%), and Indianapolis (3.0%). The other six metros with
the highest annual rent growth are spread throughout the South and
Northeast: Louisville/Jefferson, Ky.-Ind. (4.6%), Richmond, Va. (4.6%), New York, (4.5%), Birmingham, Ala. (4.4%), Washington, DC (4.2%), and Boston (4.0%).
In the West, the median rent in September dropped by -3.1%
compared to a year ago. Big metros such as San Francisco (-4.8%) and Los Angeles (-3.4%) continue to see some of
the largest year-over-year declines. Interestingly, the West also
saw a higher absorption rate for new apartments, which may be
driven by a growing demand for newer, more affordable apartments,
rather than an increase in overall demand.
The South is home to the top three metros with the most
significant year-over-year rent declines: Austin, Texas (-7.3%), Dallas (-6.2%) and Orlando, Fla. (-5.4%). Austin, a prominent tech hub, saw the greatest
decrease in median asking rents compared to the previous year,
similar to its counterparts in the West. Rent price trends in
Dallas and Orlando, areas that also experienced tech
growth during the pandemic, closely resemble their western tech
peers.
"With a record number of new units coming onto the market
driving rent prices down, those who may have given up hope of
homeownership may be able to leverage more affordable rental
options – including downsizing to a smaller unit or considering a
roommate for the near term – to help build savings for a future
home," said Jiayi Xu, Economist at
Realtor.com®. "Households considering their next move
can tap into tools like the free Realtor.com® rent
or buy calculator to help weigh their options."
Rental Data – 50 Largest Metropolitan Areas – September 2023
Metro
|
Median Rent
(0-2 Bedrooms)
|
YOY
(0-2 Bedrooms)
|
Atlanta-Sandy
Springs-Roswell, GA
|
$1,659
|
-4.9 %
|
Austin-Round Rock,
TX
|
$1,638
|
-7.3 %
|
Baltimore-Columbia-Towson, MD
|
$1,863
|
1.1 %
|
Birmingham-Hoover,
AL
|
$1,259
|
4.4 %
|
Boston-Cambridge-Newton, MA-NH
|
$3,043
|
4.0 %
|
Buffalo-Cheektowaga-Niagara Falls, NY
|
NA
|
NA
|
Charlotte-Concord-Gastonia, NC-SC
|
$1,604
|
-2.2 %
|
Chicago-Naperville-Elgin, IL-IN-WI
|
$1,801
|
-0.6 %
|
Cincinnati,
OH-KY-IN
|
$1,261
|
3.6 %
|
Cleveland-Elyria,
OH
|
$1,264
|
3.2 %
|
Columbus, OH
|
$1,205
|
2.1 %
|
Dallas-Fort
Worth-Arlington, TX
|
$1,530
|
-6.2 %
|
Denver-Aurora-Lakewood,
CO
|
$1,957
|
-1.0 %
|
Detroit-Warren-Dearborn, MI
|
$1,312
|
2.1 %
|
Hartford-West
Hartford-East Hartford, CT
|
NA
|
NA
|
Houston-The
Woodlands-Sugar Land, TX
|
$1,402
|
1.6 %
|
Indianapolis-Carmel-Anderson, IN
|
$1,305
|
3.0 %
|
Jacksonville,
FL
|
$1,531
|
1.5 %
|
Kansas City,
MO-KS
|
$1,298
|
1.4 %
|
Las
Vegas-Henderson-Paradise, NV
|
$1,509
|
-3.3 %
|
Los Angeles-Long
Beach-Anaheim, CA
|
$2,887
|
-3.4 %
|
Louisville/Jefferson
County, KY-IN
|
$1,199
|
4.6 %
|
Memphis,
TN-MS-AR
|
$1,293
|
-3.3 %
|
Miami-Fort
Lauderdale-West Palm Beach, FL
|
$2,486
|
-2.4 %
|
Milwaukee-Waukesha-West
Allis, WI
|
$1,607
|
3.9 %
|
Minneapolis-St.
Paul-Bloomington, MN-WI
|
$1,513
|
1.2 %
|
Nashville-Davidson–Murfreesboro–Franklin,
TN
|
$1,649
|
-0.2 %
|
New Orleans-Metairie,
LA
|
NA
|
NA
|
New York-Newark-Jersey
City, NY-NJ-PA
|
$2,853
|
4.5 %
|
Oklahoma City,
OK
|
$1,008
|
2.5 %
|
Orlando-Kissimmee-Sanford, FL
|
$1,710
|
-5.4 %
|
Philadelphia-Camden-Wilmington,
PA-NJ-DE-MD
|
$1,790
|
-0.4 %
|
Phoenix-Mesa-Scottsdale, AZ
|
$1,563
|
-5.2 %
|
Pittsburgh,
PA
|
$1,529
|
0.8 %
|
Portland-Vancouver-Hillsboro, OR-WA
|
$1,681
|
-5.4 %
|
Providence-Warwick,
RI-MA
|
NA
|
NA
|
Raleigh, NC
|
$1,562
|
-4.3 %
|
Richmond, VA
|
$1,533
|
4.6 %
|
Riverside-San
Bernardino-Ontario, CA
|
$2,316
|
-1.6 %
|
Rochester,
NY
|
NA
|
NA
|
Sacramento–Roseville–Arden-Arcade, CA
|
$1,864
|
-3.3 %
|
San Antonio-New
Braunfels, TX
|
$1,279
|
-2.4 %
|
San Diego-Carlsbad,
CA
|
$2,891
|
-2.0 %
|
San
Francisco-Oakland-Hayward, CA
|
$2,925
|
-4.8 %
|
San
Jose-Sunnyvale-Santa Clara, CA
|
$3,305
|
-0.6 %
|
Seattle-Tacoma-Bellevue, WA
|
$2,058
|
-3.9 %
|
St. Louis,
MO-IL
|
$1,346
|
3.0 %
|
Tampa-St.
Petersburg-Clearwater, FL
|
$1,720
|
-3.9 %
|
Virginia
Beach-Norfolk-Newport News, VA-NC
|
$1,522
|
2.6 %
|
Washington-Arlington-Alexandria,DC-VA-MD-WV
|
$2,238
|
4.2 %
|
Methodology
Rental data as of September for studio, 1-bedroom, or 2-bedroom
units advertised as for-rent on Realtor.com®. Rental units include
apartments as well as private rentals (condos, townhomes,
single-family homes). We use rental sources that reliably report
data each month within the top 50 largest metropolitan areas.
Realtor.com® began publishing regular monthly rental trends reports
in October 2020 with data history
stretching back to March 2019.
With the release of its July rent report, Realtor.com®
incorporated a new and improved methodology for capturing and
reporting more comprehensive rental listing trends and metrics. The
new methodology is expected to yield a cleaner, more representative
and more consistent measurement of rental listings and trends at
both the national and local level. The methodology has been
adjusted to better represent the true cost of primary housing for
renters. Most areas across the country will see minor changes with
a smaller handful of areas seeing larger updates. As a result of
these changes, the rental data released since July 2023 will not be directly comparable with
previous releases and Realtor.com® economics blog posts. However,
future data releases, including historical data, will consistently
apply the new methodology.
About Realtor.com®
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