Rents fell across the nation for the third month in a row due to rising supply of apartments.
The median asking monthly rent fell by 1% from a year ago in July to $1,759, according to a new report from Realtor.com. A studio cost $1,445 per month, and a one-bedroom was $1,642.
Lower rents likely translate into good news. The U.S. economy has been grappling with high inflation, which is primarily being driven by rising housing costs. The U.S. Federal Reserve has hiked its benchmark interest rate 11 times during the last 12 consecutive policy meeting to curb rising inflation.
Rents, however, have still not fallen to pre-pandemic levels. Rents are up nearly 25% in July 2023, compared to July 2019.
Rents rose the most on an annual basis for a two-bedroom unit. The median rent for a two-bed was $1,948, up nearly 27% from July 2019.
“Renters in many areas are now spending slightly less on rent relative to their overall income, giving their budgets a little more breathing room at a time of stubborn inflation and ongoing affordability concerns,” Danielle Hale, chief economist at Realtor.com, said in a statement.
The data indicated a rise in construction of multi-family homes — which includes townhomes and apartments — and an uptick in vacancy rates, Hale added. “We anticipate this downward pressure on rent prices will continue, providing many renters with much-needed stability in their housing expenses,” she said.
Rents become more affordable
Overall, rents became slightly more affordable this summer. In July, people earning the typical household income and looking to rent will only be spending around 26% of their earnings to lease a rental, down from 26.5% the previous year.
“This positive change can be attributed to a combination of declining median rents and rising median household income,” the report said.
The most affordable markets for rentals were in the Midwest, led by Oklahoma City, where renters were only spending around 18% of their median household income on housing in July.
The least affordable markets for renters include Miami, Los Angeles, San Diego, and New York City. In Miami, where the median monthly rent was $2,455 in July, renters would have spent 44% of their monthly paycheck on rent in July.
In New York, where the median monthly rent was $2,859 in July, renters would have spent 37% of their income on rent, Realtor.com said.
(Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, also a subsidiary of News Corp.