July Rental Report: Year-Over-Year Rent Prices Drop for Third Consecutive Month

Affordability advancing slowly, supported by new supply

In July 2023, nationwide rent was slightly more affordable than July of the previous year. To be considered affordable, one rule of thumb is that housing costs should fall below 30% of gross household income. In July 2023, people earning the typical household income and looking to rent would be spending 25.9% of their earnings to lease a typical for-rent home, down from 26.5% in July 2022. This positive change can be attributed to a combination of declining median rents and rising median household income. Additionally, increased supply is boosting vacancy rates and helping drive down rents. However, vacancy rates still remain below pre-pandemic levels, rent prices are elevated overall, and affordability continues to be a significant issue. Renters in eight of the top 50 metros, for example, pay a rent share higher than 30% relative to the median household income.

Middle America remains an affordable oasis between costly coastal locations, for now

The least affordable markets in July 2023 include coastal and Sun Belt locations, where renters often spent more than 30% of the median household income on housing costs. Miami, Fla., was by far the least affordable rental market, followed by Los Angeles, San Diego, New York City, Boston, Riverside, Calif., Tampa, Fla., and Orlando, Fla. In three of these eight cities, affordability has worsened compared with last year. In Miami, for example, renters would have spent 44.2% of their monthly paycheck on the typical rental in July 2023. Conversely, Oklahoma City was the most affordable rental market in July 2023, with renters spending 18.4% of their median household income on housing. Other affordable rental markets include midwestern mainstays such as Columbus, Ohio; Minneapolis, Minn.; Cincinnati; and Kansas City, Kan.

South and West affordability improves, Midwest rents rise

While rents in the South and West remain high, these areas show improved affordability, following a consistent downward rental cost trend during the preceding months. The most significant improvement was Riverside, Calif., where renters with a typical household income would spend 33.9% of their monthly paycheck on the typical rental in July 2023; while higher than the 30% affordability threshold, this represents a decline of 3.4 percentage points compared with 12 months ago. Meanwhile, strong demand in Midwest markets such as Milwaukee–Waukesha, Wis.; Birmingham, Ala.; and Indianapolis is driving lower vacancy rates and faster rent growth, eroding affordability in more traditionally budget-friendly locations.

“As renters determine their next move, whether it’s to stay put, save up to buy a home, or move and rent in a new location, the rental landscape is showing signs of improvement,” said Jiayi Xu, Economist at Realtor.com®. “To determine if renting remains the right choice for your household, free, trusted tools like our Rent Vs. Buy Calculator or our most affordable markets research can help renters make more informed housing decisions.”