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Renters celebrated three straight months of good news in December as the national median asking rent dipped down once again.
The median asking rent fell 0.8 percent year over year during the last month of 2023, the third straight month of declines after a 2.1 percent drop in November and a 0.3 percent annual decrease in October. December rents were down 0.2 percent from the previous month, according to a report released Monday by Redfin.
The report attributes the slowdown in rental pricing to an increase in supply brought on by an apartment building boom in recent years. More units are just starting to come on the market, leaving some landlords struggling to fill vacancies and dropping prices as a result. Some landlords are also offering more concessions, such as free parking or free months of rent, decreasing the overall prices renters are paying.
Because renters have slightly more options to choose from, the rental vacancy rate rose to 6.6 percent during the third quarter of 2023, according to Redfin.
The report also predicted that prices could come down even further, if mortgage rates continue to drop.
“High supply — more so than low demand — is driving rent declines. But if mortgage rates continue to drop at a fast clip in 2024, slowing rental demand could become a major driver of rent declines,” said Redfin Economics Research Lead Chen Zhao. “That’s because more Americans would ditch the rental market to become homeowners, leaving landlords with even more vacancies.”
Rental growth varied from market to market, with the Midwest seeing a 3.7 percent increase year over year as its affordable markets become more attractive. Rent also rose in the Northeast, climbing 1.7 percent annually to a median of $2,439. Rents declined in the South and the West, falling 1 percent to $1,632 and 0.6 percent to $2,348, respectively.
Rents are continuing to increase in the Northeast and Midwest, likely because those markets have added less new rental inventory which gives landlords less incentive to reduce rent, the report theorized.
“With rents falling and vacancies rising, now is a good time to shop around or try to renegotiate your rent if your lease is up — especially if you’re a renter in the South or West,” Zhao said.
