Rental Markets Show Regional Divide as Supply Impacts Prices
Over a five-year period landlords still saw an overall rent boost.
A new report on rent trends in the U.S. repeats a familiar refrain. Rents tend to rise and fall according to the availability of new supply. In the Midwest, where demand outstrips supply, rents are rising. In other areas, especially the South, where thousands of new apartments are coming online or in the construction phase, rents are falling.
One benefit of falling rents, however, should be to help limit the growth of shelter inflation, one of the biggest recent drivers of price increases, according to a Realtor.com report.
And even though for the 14th consecutive month landlords nationally may have watched rents slip by -0.5% year-over-year in September, over five years, landlords still saw an overall rent boost for studios, one-bedroom and two-bedroom apartments.
Studio apartments experienced the sharpest drop in median rent in September, sliding 2.3% compared to the prior year to $1,442. But over the five years from September 2019, studio rents rose 12.7%, or $162. Median one-bedroom rents fell -0.5% to $1,623 in September 2024, but that was 18%, or $247, more than in 2019. Median two-bedroom rents fell -0.4% to $1,930 in September this year, but that was 21.4%, or $340, more than in 2019.
“Notably, while median rents are still $286 (19.6%) higher than in September 2019 (pre-pandemic), this increase is nearly in line with the rise in overall consumer prices (up 22.7% over the same period) and pales in comparison to the 50.8% increase in median price-per-square-foot of for-sale home listings, also for the same five year period,” the report stated.
Of the 10 markets with the fastest year-over-year growth in September, one was in the Northeast, three in the South, three in the Midwest, and three in the West. Eight of the 10 Midwestern markets enjoyed rent hikes, including Cincinnati at 3.4% annual growth, St. Louis (2.6%) and Minneapolis (1.9%). However, rents fell in Chicago (down 2.6%) and Detroit (down 0.3%).
Eight of the 10 metros with the largest annual rent drops were in the South, led by Nashville, where rents dove 4.8%. Dallas, Austin, Birmingham, Memphis, Atlanta, Miami and San Antonio all saw rents fall between 3.1% to 4%.