Rental Market Sees Sixth Consecutive Monthly Decline, Yet Prices Remain Above Pre-Pandemic Levels

Apartment© Max Rahubovskiy from Pexels / Canva

The rental market experienced its sixth straight month of decline in January, providing some reprieve for renters, according to the monthly Realtor.com® Rental Report. However, despite this downward trend, prices remain higher than pre-pandemic levels due to strong demand and a limited supply of new units in several markets.

The median asking rent for 0-2 bedroom units in the 50 largest metros dropped to $1,712 in January, a $5 decrease from the previous year and $46 below its August 2022 peak. The recent Realtor.com® Avail Landlord & Renter Survey found that fewer landlords plan to raise rents in the upcoming year. Nevertheless, prices are still 18.3% higher than they were four years ago.

“Rental prices are declining, especially in places where new units are entering the market,” said Danielle Hale, Chief Economist at Realtor.com®. “Still, there’s plenty of demand driven by the large population of renters, including potential first-time homebuyers who remain on the sidelines for now.”

The report also revealed that studios saw the largest rent declines, with the median asking rent falling by -1.0% to $1,434. This is down -3.8% from its October 2022 peak but still 11.9% higher than four years ago. Two-bedroom units also experienced a decline in asking rents of -0.6% to $1,892, while rents for one-bedroom units rebounded after declining since July 2023, increasing by 0.1% year over year to $1,591 in January.

Regionally, rental markets showed mixed results. In the West, the median rent fell by -0.3% from a year ago, led by declines in Phoenix, Riverside, Calif., and Las Vegas. However, rents rebounded in big metros like Los Angeles and Seattle, which showed year-over-year increases following eight straight months of decline.

In contrast, the Northeast saw rents rise faster in big metros such as New York and Boston, where labor markets are strong, and there’s slow growth in new housing stock, putting upward pressure on rents.

The Midwest also witnessed a surge in asking rents, rising by 0.2% in January, bolstered by markets such as Chicago, Indianapolis, and Kansas City, Mo. Meanwhile, the South saw a 1.2% decline in the median asking rent, led by declines in Memphis, Tenn., Atlanta, Austin, Texas, St. Louis, Mo., and Miami.

These trends reflect a rental market that is adjusting to the ongoing impact of the pandemic, shifting work patterns, and evolving demographic trends. The current decline in rental prices provides some relief for renters, but prices remain stubbornly high in many markets due to solid demand and constrained supply.

Looking ahead, Realtor.com® anticipates the rental market to decline only slightly in 2024, as an increase in the supply of new units is balanced out by continued enthusiasm for renting as a more affordable alternative to purchasing. This outlook suggests that the rental market will continue to be an important part of the housing sector, with implications for landlords, renters, and policymakers alike.

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