While rent prices remain elevated compared to pre-pandemic levels, the median asking rent price fell $29 from the July 2022 peak, to $1,747, according to Realtor.com.
“As rents ease and both home prices and mortgage rates continue to climb, it’s become more economical to rent than to buy in nearly all major markets,” Danielle Hale, chief economist at Realtor.com said in a statement. “However, even with an influx of new apartment units coming onto the market and putting a lid on rent growth, renters are claiming these new apartments faster than prior to the pandemic.”
The Wall Street Journal reported on Sunday that the premium on buying a home versus renting one is at its highest level since 1996. The average monthly mortgage payment in September was 52% more expensive than the average apartment rent, according to data from real estate firm CBRE.
An influx of new multifamily units on the market drove prices down, improving affordability for units of all sizes.
In September, the annual completion rate of multifamily buildings with five or more units increased 10.1% month-over-month and 15.0% year-over-year. The addition of new apartments to the market prompted prices to decline, improving affordability.
On a yearly basis, median asking rents fell for two-bedroom units(-0.7%), for one-bedroom units (-0.3%) and for studios (-0.5%), while remaining well above pre-pandemic levels.
As prices ticked down, renters flocked to affordable units, the Realtor.com report found. Indeed, within three months of completion, 69.8% of the affordable rental units (renting for $1,850 or less) were taken. Meanwhile, during the same timeframe, 57.2% of units worth over $1,850 were rented.
Midwest metros led growth in rent prices
Compared to other regions, metros in the Midwest posted faster year-over-year growth in rent prices. Among the top 10 metros experiencing the fastest rent growth on a yearly basis, four were in the Midwest: Milwaukee (3.9%), Cincinnati (3.6%), Cleveland (3.2%), and Indianapolis (3.0%). The six remaining metros were sprinkled throughout the South and the Northeast: Louisville/Jefferson, Kentucky-Indiana (4.6%), Richmond, Virginia (4.6%), New York, (4.5%), Birmingham, Alabama. (4.4%), Washington, DC (4.2%), and Boston (4.0%).
Meanwhile, the median rent in the West fell by -3.1% year-over-year, with big metros such as San Francisco and Los Angeles posting 4.8% and 3.4% declines. The South, on the other hand, hosted the top three metros with the biggest yearly rent declines: Austin (-7.3%) and Dallas (-6.2%) in Texas and Orlando, Florida (-5.4%).
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