The drop compares to rents’ record high in August 2022. But instead of lowering rents, many landlords have offered perks like one-month free or cheaper parking.
SEATTLE – The U.S. rental market has been slowing for more than a year, but median asking rents are still only $24 below their record high of $2,053 set in August 2022, according to a new report from Redfin.
The median asking rent was $2,029 in June, little changed from $1,995 one month earlier and $2,019 one year earlier.
In percentage terms, rents were up 0.5% year over year in June, not far from May’s 0.6% annual drop. Month-to-month, June rents rose 1.7%.
“The housing market tends to be ‘downside sticky,’ which means rents don’t typically fall much even when renter demand pulls back,” says Redfin Deputy Chief Economist Taylor Marr. “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. … (so) most renters still aren’t finding big bargains.”
While renters haven’t seen a huge benefit from the changes, however, the market’s relative stability has helped slow the rise of inflation. Consumer prices were up 3% this year through June, a deceleration from the 4% figure reported in May and the peak of about 9% last summer. So the slowdown in inflation reported Wednesday is due, in large part, to the deceleration in rent growth over the past year.
“Inflation should continue easing this year and into 2024, partly because the recent slowdown in rent growth isn’t fully baked into inflation data yet – and partly because rents have room to fall,” says Redfin Economics Research Lead Chen Zhao. She says there are still “a backlog of under-construction rentals that have yet to hit the market.”
Rents rising fastest in Northeast and Midwest
In the Northeast, the median asking rent rose 4.3% year over year to a record $2,503 in June. By comparison, asking rents rose 3.7% to $1,396 in the Midwest and 0.8% to $1,670 in the South. In the West, rents fell 0.3% to $2,452.
Rent growth has slowed fastest in the West and South in part because it accelerated so quickly during the pandemic as people flooded into Sun Belt cities including Phoenix, Miami and Dallas. As a result, rents in those regions have more room to cool as supply catches up with demand.
But while rents have dipped from a year ago in some areas, affordable deals are still often hard to come by.
“The headlines say San Francisco’s housing market is plummeting, but I’m still seeing people moving in and spending $4,000 a month on rent,” says local Redfin Premier real estate agent Ali Mafi. “A lot of tech workers who left the Bay Area for places like Austin during the pandemic are now coming back because their employers cut their pay when they moved and/or have asked them to come back to the office.”
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