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Asking rents recorded their largest annual gain in over a year in February, according to a new report.
The median asking rent in the United States rose 2.2 percent year over year to $1,981 in February, the largest annual gain since January 2023 and a 0.9 percent increase in the rate of growth compared to the month before, according to a report released Monday by Redfin.
One reason for the size of the increase is that asking rents were at a low point last February, while higher mortgage rates driving up rental demand likely also played a role, according to Redfin economists.
Daryl Fairweather
“Mortgage rates ticked back up in February — a disappointing development for prospective homebuyers, who just a few months ago got a glimmer of hope as rates finally started to fall,” said Redfin Chief Economist Daryl Fairweather. “With rates still elevated, many are opting to continue renting, which is buoying rental demand, and as a result, rent prices.”
The Federal Reserve is expected to lower interest rates before the end of the year, which could result in more renters becoming buyers and rental price growth slowing.
While rent climbed in February, prices are relatively stable compared to the past two years, when the pandemic inspired a rental price roller-coaster ride in cities across the United States. In 2022, national rent growth slowed compared to the rapid rises seen during the pandemic, while 2023 saw rent prices actually decrease on a national level.
February’s asking rent was $73 below the record high set in August 2022 but was still $387 higher than it was in February 2020 — the month before COVID-19 was declared a pandemic and a relocation frenzy drove up rents.
The largest rent increases in February were seen in the Midwest and Northeast. The median asking rent in the Northeast jumped 5.2 percent annually in February, the largest gain in nine months. The Midwest saw rents rise 4.9 percent to $1,441, the biggest increase recorded there in five months.
