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National rent growth cooled to its slowest annual pace in 16 months in September, a sign the rental market may be normalizing that’s sure to be welcomed by weary renters.
Median monthly rent in the largest metropolitan areas of the United States dropped for a second straight month to $1,759 in September, $12 lower than the previous month and a $22 drop from its peak in July, according to a report released Thursday by Realtor.com.
Rents in September rose 7.8 percent from September of 2021, the lowest year-over-year price increase since May 2021, according to the report. Economists said the slower growth points to a return to more predictable seasonal changes in the rental market after two years of unpredictability and historic rent increases across the country.
Danielle Hale | Realtor.com
“After more than a year of double-digit yearly rent gains and nearly as many months of record-high rents, it’s especially important to see consistency before we confirm a major shift like the recent rental market cooldown,” Realtor.com Chief Economist Danielle Hale said in a statement. “But September data provides that evidence, as national rents continued to pull back from their latest all-time high registered just two months ago.”
“This return of more seasonal norms indicates that rental markets are charting a path back toward a more typical balance between supply and demand, compared to the previous year,” Hale added.
Hale predicted rents would continue to slow as inflation takes a bigger bite out of renters paychecks, but said it was unlikely they would return to the pre-COVID rate of growth for another year.
“We expect rent growth to keep slowing in the months ahead, partly driven by the impact of inflation on renters’ budgets,” she said. “However, it’s unlikely that rents will return to a more normal pre-COVID pace of growth for at least another year when available rental inventory starts to reflect the recent uptick in multifamily new construction.”
A report also released Thursday by Redfin pegged September as the fourth-straight month in which annual rent growth decelerated, and said rents in September were growing at half the rate they were six months ago.
Redfin Deputy Chief Economists Taylor Marr said rents were beginning to slow as the relocation spurred by remote work during the pandemic came to an end, and more apartments that had been under construction came on the market.
Taylor Marr | Redfin
“The rental market is coming back down to earth because high rents and economic uncertainty have put an end to the pandemic moving frenzy of 2020 and 2021, when remote work fueled an enormous surge in housing demand that would’ve otherwise been spread out over the coming years,” Marr said. “Rising supply is also causing rent growth to slow. Scores of apartments that have been under construction are now coming on the market, and more homeowners are choosing to become landlords instead of selling in order to hold on to their record-low mortgage rates.”
