Asking Apartment Rates Rise in Northeast, Midwest

Markets continue to reflect regional and local variations in their asking rates with the Northeast/Midwest posting rises of 5%, even as numbers nationwide declined from a year earlier in May, according to Redfin.

Specifically, the median U.S. asking rent fell 0.6% YOY to $1,995 in May. That nationwide drop is the largest since March 2020, attributed to a building boom that increased supply and economic challenges that lessened demand. 

Despite that trend, the Northeast/Midwest’s increase is an expected result of growing demand in those areas, cited in several GlobeSt.com reports. 

Asking rents climbed 5.4% in the Northeast to $2,495, 4.9% in the Midwest to $1,406 and 0.8% in the South to $1,663. 

Declines occurred, however, in the West where they dropped 2.1% from a year earlier to $2,409, which was almost four times the national figure. That was the only region Redfin analyzed that saw an annual decline. The reasons include more vacancies because of more new non-single-family homes and tech hubs like Seattle and San Francisco going through rent declines as tech workers receive pink slips.

Rent growth was steadier in the Midwest, home to many affordable housing markets. Growth cooled fastest in the South and West after surging so much during the pandemic due to in-migration to cities like Miami and Phoenix.

Increasing Supply 

A large number of rentals available have made it tougher for landlords to hike prices, which gives renters the upper hand in having a bigger pool of options available.

The number with five or more units increased 24.2% YOY to 400,000 in April, the most recent month when data is available. At the same time, the number of permitted residential projects in buildings of the same size fell 22.9% YOY to 503,000 in April. When these not-yet-completed buildings hit the market, rent prices may drop more.

Another reason for rent drops is that fewer people are moving due to several factors such as overall uncertainty about the economy, still high rental prices in some areas and rising costs due to inflation.

Finally, some renters look to another housing option beyond multifamily living. Among the possibilities—at least for now—are leasing a home from those who choose to lease out their property rather than sell. Their reasons vary. Some have already bought another home and moved in and seek cash to afford both. Others want to retain equity in a home with a possibly low mortgage payment.   

“Many homeowners are deciding that instead of selling, they’re going to renovate their current home or rent it out while they wait for the market to improve,” said David Orr, a Redfin Premier salesperson in Sacramento, Calif. 

Some homeowners also may be waiting for housing prices to bounce back to high prices if they’re in a market that’s seen them drop. And then there are any number of BRT houses available too, designed specifically for the renter who favors the look and feel of a single-family home, even if it’s not their own.