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Rental prices might be rising as we enter the summer months, but they’re down from a year earlier and even further compared with the COVID-19 pandemic peaks.
A new Realtor.com® report has found that the median asking rent in the 50 largest metros for April was $1,723. That’s up by $16 from March, following a typical seasonal trend, but down by $12 from a year ago—the ninth month in a row where rents have fallen annually. This is also $33 lower than the pandemic high seen nationally in August 2022.
Rents plummeted the most in Austin, TX, where renters paid a median of $1,494 in April and pocketed an extra $195 per month, paying 11.5% less if they move in today compared with the pandemic peak in September 2022.
Yet those in Bat City should note that the monthly rent at April’s level is still $260 a month higher than five years ago, before COVID-19.
“It is not surprising to find renters in Austin experienced the largest relief given the substantial number of new multifamily homes entering the Southern market,” says Realtor.com economist Jiayi Xu in her analysis.
Austin renters are also fortunate to have a vacancy rate that is increasing. Xu expects that even with the typically higher-priced spring season having arrived, Austin’s rents should still give relief.
“A new peak for Austin in 2024 is unlikely,” says Xu. “Even if Austin rents made a sharp about-face and surged at the highest rates observed during the past two years, they would not notch a new high in 2024, evidence of just how much rents in Austin have retrenched.”
Renters in Austin, TX, experienced the largest rent relief by saving $195 per month with a median rental price of $1,494.
Realtor.com
Rounding out the top five metros where rents have dropped the most are Las Vegas (-11.1%); San Francisco, CA (-9.9%%); Charlotte, NC; and Nashville, TN.
The typical renter in Las Vegas, the town with the second-biggest rental decline, could save $184 a month, an 11.1% reduction compared with those who moved in when rent peaked in June 2022 at $1,665.
Although, like in Austin, rent is still high compared with the days before the pandemic.
Las Vegas had the second-largest rental declines with a median price of $1,481.
Realtor.com
Shockingly, San Francisco comes in third for the metros with the fastest-falling rents.
The trolley town still has the highest rent of the top three, but renters could save a significant $303 a month from the peak of July 2022. And there’s more good news for Golden City inhabitants: It is the only metro where renters pay less money than at the same time pre-pandemic.
Why is this notoriously expensive city softening?
“The rise of lower-cost tech markets and softness in the tech sector have had an outsized impact in San Francisco, pushing rent prices downward,” explains Xu.
San Francisco had the third-largest rent fall, with a median of $2,766.
Realtor.com
Where rents are rising
Meanwhile, it might come as a surprise to many that rents have surged in the Midwest. Indianapolis ($1,334), Milwaukee ($1,671), and Minneapolis ($1,529) saw the largest increases and hit new record rental highs since March 2019.
There’s a simple reason: It’s where the jobs are.
“The robust labor markets in these metropolitan areas may serve as significant drivers of accelerated rent growth,” Xu explains.
Each metro has a slightly lower unemployment rate than the 3.9% rate in the Midwest and 3.8% across the top 50 metros.
Beyond a strong labor market, the area has a scarcity of housing, creating an expensive combo for renters.
“The completion of new multifamily homes has been growing at a relatively slow pace, contributing to a decrease in rental vacancy rates,” says Xu.
Rents in three other Midwest metropolises—Cincinnati ($1,354), Cleveland ($1,210), and Chicago ($1,834)—are edging close to peak levels. If their upward trend continues, they’ll see record rents this summer.
The future of rental prices
While rents are declining annually, they might not continue plummeting much further.
“While the year-over-year change in market asking rents tracked by Realtor.com has been negative since last August, the decline appears to have bottomed out in February,” warns Xu. “This deceleration trend could make it difficult to see further improvement in the overall rate of inflation, complicating the Fed’s policy decision and underscoring the need for additional housing construction to alleviate the supply shortage that is contributing to higher cost.”