November has seen a nationwide dip in rents, largely driven by sharp declines in some of the hottest markets, including Sun Belt cities like Austin, Tampa, and Raleigh. These areas, which saw explosive growth during the pandemic, are now experiencing the most significant drops, contributing to a 0.7% year-over-year decline in national asking rents. This shift reflects a move toward affordability in these once red-hot regions, according to Redfin’s latest multifamily report.
Austin, Texas, experienced the steepest drop in asking rents at 12.4% year-over-year, followed by Tampa, Florida, and Raleigh, North Carolina, which saw declines of 11.3% and 8.4%, respectively.
“Affordability is improving as rents fall, wages rise, and more new apartment buildings open,” said Redfin senior economist Sheharyar Bokhari. “As construction starts to slow, rents will eventually tick back up, but 2025 is shaping up to be a renter’s market, with the potential for the affordability gap between buying and renting to widen.”
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Although Sun Belt metros led the way in rent contractions, rents grew in markets outside the region. Cleveland, Ohio, recorded the largest year-over-year rent increase at 10.6%, followed closely by Louisville, Kentucky, at 10.2%. Other East Coast and Midwest cities, including Washington, D.C., and Baltimore, also posted strong rent growth, rising 9.4% year-over-year. These regions, where new construction has been less prolific, have a more limited supply of affordable housing, contributing to rising rents.
However, asking rents for apartments across all bedroom categories continued to fall for the fifth consecutive month. Median rents for 0-1 bedroom apartments were down 1.7% year-over-year to $1,450, while rents for two-bedroom units fell 1.1%, and rents for three-bedroom or larger units dropped 2.3%. The decline was most significant on a price-per-square-foot basis, with rents for 0-1 bedroom apartments falling 2.5%, and three-bedroom units dropping 2.4%.
After years of steady increases in new apartment supply, especially in cities like Austin, Texas, and Phoenix, Arizona, the market has seen a more tempered pace of development. This trend follows a recent report from CBRE, which found that 153,000 newly leased or renewed apartments in the third quarter represent the highest absorption level since the firm began tracking apartment leases in 1985.
Although rents are expected to remain flat at a national level, the impact of the new supply will vary by region. In areas with continued high supply, rents could decline further, while markets with limited new construction may see rents rise as demand outpaces available inventory.
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