Key Details:
- A new report from Redfin shows the median U.S. asking rent for August at $2,052—just $2 less than the record high set one year earlier.
- That rent is up just 0.7% from the previous month’s typical rent of $2,038.
- While rents are near their all-time high, landlords in some parts of the country are offering concessions to attract renters as vacancies rise.
According to a new report from Redfin, the median U.S. asking rent for August is just $2 shy of the record high set one year ago. At $2,052, the August rent is up just 0.7% from the previous month’s $2,038.
Even with rents near their all-time high, landlords in some parts of the country are offering concessions like one-time discounts to attract renters and fill the growing number of vacancies, without lowering the advertised asking rent for available units.
That way, while rents are effectively coming down in some parts of the country, the declines don’t show up in recorded asking-rent data.
Also, while rents are up month over month, rent growth is strongest in the Midwest and Northeast, while rents are coming down in the West and South.
Jon Ziglar, Chief Executive Officer for Rent. had this to say about landlord concessions.
A year ago, you really didn’t see concessions in the market. Fast forward to today, and they are far more common, with landlords offering from one to three months free in an effort to attract new tenants without lowering their asking rents. Higher-end properties are beginning to see pressure in certain markets as a significant portion of new units coming online are in the higher end and luxury segment. We are still seeing a lot of competition for more affordable units due to less new supply, as well as increased pressure on consumer wallets limiting the ability to stretch for that higher level experience.
Landlords balance concessions with rent increases
Some rental owners are offering one-time discounts to new prospective tenants, while others are raising rents for existing tenants but not for new ones.
Even with rents hovering close to their all-time high, they’re not making double-digit jumps like they were in the past couple of years when rental demand was on the up. Last August, for example, the median asking rent rose 12.3% year over year.
Over the past year, rent growth has slowed, largely due to the following reasons:
- Slowing household formation
- Economic uncertainty
- Declining affordability
- Increased rental supply
In Q2 2023 (the most recent quarter for which this data is available), the number of completed residential properties with a minimum of five units went up 28.9%. As a result, landlords now have more vacancies to fill and less latitude for raising rents.
The national rental vacancy rate in the second quarter was 6.3%, up from 5.6% in Q2 2022. That’s just under the first quarter’s 6.4% vacancy rate—the highest in two years.
Rents dropped in the West and South—rose in the Midwest and Northeast
In the West, the median asking rent dropped year over year by 1.1% to $2,469 in August. In the South, it dropped 0.3% to $1,673, marking the first annual decline for this region since 2020.
Compare that to a 4.6% year over year increase in the Midwest to a record asking rent of $1,434. In the Northeast, asking rents climbed 1.2% year over year to $2,509.
Rents dropped in the West and South mainly because, during the pandemic, both regions saw bigger increases in asking rents as people migrated to Sun Belt cities like Phoenix, Dallas, and Miami. Once the migration cooled, rents had more room to fall. The West has also been affected by layoffs in the tech sector. But in recent months, as the impact of the pandemic rental boom fades and layoffs ease, the rental market in these areas has started to stabilize.
Read the full report for more details, including the methodology.
Takeaways for real estate agents
Regardless of the market you serve, tracking changes in the rental market is important simply because it’s (probably) important to many of your potential clients. Aspiring homeowners in your area may already be keenly aware of annual rent increases (and the impact on their budgets).
With just 18% of consumers thinking it’s a good time to buy, you could change consumer sentiment in your area by identifying the advantages of acting now or within the next few months—as opposed to waiting a year or longer.
Tune in for the daily Hot Sheet for data on the housing market you can share with prospective buyers and sellers.
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