Median Apartment Asking Rents Haven’t Fallen That Much

For more than a year, the once sizzling rental market has been slowing. Yet, the median asking rent is still only $24 below what its record price was, according to Redfin.

In June, the median asking rent was $2,029, or $34 more than the $1,995 it reached in May and that was $10 more than a year ago when it was $2,019. Its record high when it was $24 higher was in August 2022 when it reached $2, 053.

What’s more key than these specific numbers are that they reflect a rental trend that Taylor Marr, Redfin’s Deputy Chief Economist, explains. “The housing market tends to be ‘downside sticky,’ which means rents don’t typically fall much even when renter demand pulls back. Instead of lowering rents when business is slow, many landlords offer perks like a free month’s rent or discounted parking, which tends to be less of a hit to profits,” he said.

But even if this trend isn’t affecting rent prices much, it is influencing inflation, the report also shared. Consumer prices slowed to a 3% increase in June from 4% in May and from a much higher share of about 9% last summer. One factor for that is the slowdown in rent growth over the last year. Inflation is expected to cool more this year and into next year, according to another Redfin expert, Economics Research Lead Chen Zhao. The reason, he said, is that “the recent slowdown in rent growth isn’t fully baked into inflation data yet, and partly because rents have room to fall.” The potential fall is also due to the backlog of rentals that are under construction but not out of the pipeline and available for rent.

One prime reason for rent growth cooling is the lack of movement among renters due to an uncertain economy frequently mentioned—including the possibility of recession—plus the growing choices they have, if they do want to relocate. Completed projects with five or more units climbed 23.9% year-over-year to 493,000 on a seasonally adjusted basis this past May. As a result, renters, not landlords, are in a favorable position with a higher number of vacancies, which leads to less wiggle room for landlords to raise rent prices.

But this situation could change as the rental boom eases. The number of permitted residences with five or more units fell 12.2% year-over-year to 540,000 on the same adjusted basis this May. And because not all permitted buildings necessarily move forward to completion, the numbers available could be even fewer.

Where Rents are Rising Faster

The Northeast and the Midwest saw higher numbers, respectively, at 4.3% year-over-year and 3.7% for the same period. In the South, they rose 0.8% and, in the West, they fell 0.3%. Rent growth has slowed more in the West and South because those two markets grew faster during the pandemic as people relocated to such cities as Phoenix, Miami and Dallas. At the same time, that doesn’t translate necessarily to affordable deals, even in pricey San Francisco. Some who exited that market and others are returning, said Redfin’s Ali Mafi with Redfin Premier.