In a notable shift within the rental market, the share of property managers providing concessions on their rental listings has seen a significant increase year-on-year as of July, according to insights from Zillow. This trend aligns with a broader cooling of the rental market, presenting potential advantages for renters seeking favorable lease terms. The report highlights that the proportion of rental listings offering various concessions — including enticing offers such as free weeks of rent — climbed 7.8 percentage points compared to the previous year, reaching 33.2% last month.
This marks a slight increase from June's figure of 33%, indicating a growing willingness among landlords to entice potential tenants. Driving this trend is an impressive apartment construction surge, with nearly 60,000 multi-family units completed in June alone. This milestone represents the highest number of units finalized in any single month over the past half-century, as reported by Zillow.
The influx of new housing options is rebalancing the supply-demand dynamics within the rental market, offering renters a greater variety of choices. Skylar Olsen, Chief Economist at Zillow, commented on the current market landscape, stating, "Builders have stepped up and built an incredible number of homes in response to soaring rents during the pandemic, and renters are now seeing the benefits.
Now is a great time for renters to find a deal, with more new apartments hitting the market than at any time in the past several decades." Prominent metropolitan areas such as Raleigh, Charlotte, Atlanta, Salt Lake City, Nashville, and Austin have reported that over 50% of their rental listings are now offering concessions.
In contrast, cities like San Jose, Baltimore, Milwaukee, and Pittsburgh have observed a decline in the share of such listings compared to the previous year. Despite the positive shift for renters, the rental vacancy rate has remained steady at 6.6% during the second quarter, marking the highest level since the winter of 2021.
Interestingly, the number of multi-family units currently under construction has decreased for eight consecutive months, suggesting a potential slowdown in new housing availability in the near future. Olsen further analyzed the situation, stating, "Rents are still growing, but it's a far cry from the steep rent hikes of two or three years ago, and renters will find sweeteners being offered by more than half of rentals in some places." Indeed, recent figures showed that rents across the United States increased by 0.4% month-over-month in July, a deceleration from the 0.5% growth recorded in the previous month. Looking ahead, Olsen noted, "A slowing job market and lower mortgage rates could mean falling rents if the current trends hold." This commentary underscores the evolving dynamics of the housing market and the opportunities it may present for renters moving forward..