Asking rents for apartments have recently declined both sequentially and annually, touching the lowest levels seen since March 2022 amidst a general cooldown across various bedroom categories, as reported by Redfin. In November, the median asking rent in the United States decreased by 1.1% month over month and by 0.7% year over year, bringing the total down to $1,595.
Additionally, the asking price per square foot for rental apartments has dropped by 2.2% year over year, marking the lowest price point since December 2021. For the fifth consecutive month, rents have declined across all bedroom categories as detailed in the report from the real estate brokerage. Specifically, for studios and one-bedroom apartments, asking rents have fallen by 1.7% year over year, reaching the lowest level since November 2021.
In contrast, the asking rents for two-bedroom units have decreased by 1.1%, while units with three or more bedrooms saw a reduction of 2.3%. "Renters in areas where construction has boomed are in a sweet spot right now," noted Redfin's Senior Economist Sheharyar Bokhari. "Affordability is improving as rents fall and wages rise, and there is increased choice with more and more new apartment buildings opening." Moreover, the growth in shelter prices has slowed to 0.3% in November, down from 0.4% in October, and has seen an annual increase of 4.7%, the smallest year-over-year rise since February 2022, according to the Bureau of Labor Statistics. The rental market has maintained a largely flat trend over the past two years, with a slight downturn observed in recent months, primarily due to a record number of new apartments entering the market this year, as per Redfin’s analysis.
The completion of apartments surged nearly 23% nationally year over year in the second quarter, which represents the highest level recorded in more than a decade. Correspondingly, the vacancy rate for buildings with five or more units rose to 8% in the third quarter, the highest level since early 2021.
Bokhari also predicted, "As construction starts to slow, rents will eventually tick back up, but 2025 is shaping up as a renter's market with the potential for the affordability gap between buying and renting to widen.".