Average Rent in the U.S. Drops to Lowest Level Since March 2022 - Redfin
According to a recent report from Redfin, the average rent requested in the U.S. fell to $1,595 in November, representing a 0.7% decrease compared to last year and marking the lowest level since March 2022. This decline in rent prices also represents a 1.1% drop from the previous month. The current downward trend in rent prices brings the average rent 6.2% below the all-time high of $1,700 recorded in August 2022.
The report also highlighted some improvement in rent affordability, noting that November marked the 19th consecutive month of year-over-year decrease in average requested rent per square foot (PPSF), which declined by 2.2% to $1.79. This marks the first time since November 2021 that the average PPSF has fallen below $1.80.
The rental market, which has been relatively stable over the past two years, is showing a slight downward trend in recent months. This situation is partially attributed to a significant increase in the number of new apartments completed this year, reaching the highest level in over a decade. New apartment completions rose by 22.6% year-over-year in the second quarter, contributing to an increase in the vacancy rate for buildings with five or more units to 8% in the third quarter, the highest level since early 2021.
Sheharyar Bokhari, Senior Economist at Redfin, commented on the current state of the rental market: "Renters in areas experiencing a construction boom are currently in a sweet spot. With rents declining and wages rising, affordability is improving, and increasingly more new apartment buildings are coming online." Bokhari also noted that while construction is expected to slow down, the market could see rents rise again, although 2025 is expected to be positive for renters and could potentially widen the affordability gap between buying and renting a home.
The report further emphasized that average requested rents for studios and one-bedroom apartments decreased by 1.7% year-over-year to $1,450, marking the lowest level since November 2021. Two-bedroom apartments saw a decline of 1.1% to $1,671, while rents for three-bedroom or more apartments dropped by 2.3% to $1,955.
When analyzing price per square foot, the decline was more pronounced; studios and one-bedroom apartments experienced the largest drop at 2.5%, followed by three-bedroom apartments at 2.4% and two-bedroom apartments at 1.2%.
Looking at regional data, Sun Belt metropolitan areas continued to see the most significant declines in average rents. Austin, TX led with a 12.4% decrease, followed by Tampa, FL (-11.3%), Raleigh, NC (-8.4%), Jacksonville, FL (-7.5%), and Nashville, TN (-7%).
On the other hand, rents rose the most in Midwest and East Coast metropolitan areas, where new construction is less common compared to the Sun Belt. The largest increases were observed in Cleveland, OH (10.6%), Louisville, KY (10.2%), Baltimore, MD (9.4%), Washington, D.C. (9.4%), and Providence, RI (9.3%).