According to Apartment List’s February report, the nationwide median rent fell by 0.3 percent to $1,373, continuing the winter rent dip.
In the monthly report, Apartment List economists write that the recent declines are in line with a seasonal pattern for the rental market, in which fewer renters move in the fall and winter, but this year’s dip has been sharper and more prolonged than usual.
Apartment prices across the country are cheaper on average than they were a year ago.
Despite this, prices remain high. Despite price increases over the last three years, the national median rent remains higher than it was three years ago.
A total of 73 of the nation’s 100 largest cities reported lower rents in January, and 53 of them reported lower prices. In Oakland, CA, rents have fallen by 9.1% year-over-year, the sharpest decline over the past year. All of these cities have seen rents fall by 5 percent or more, as well as Boise, ID, Austin, TX, Atlanta, GA, Nashville, TN, and Portland, OR.
Rents may be on the mend
It was the sixth consecutive month of rent declines, but it was modest compared with recent months’ declines, which indicates that market slowdown may be nearing its end.
While the recent slowdown was timed in line with expectations, its magnitude was more pronounced than we could have anticipated. In the five years since our index began (in 2017), rents have fallen by 3.5 percent nationwide, the second sharpest seasonal dip we’ve ever seen.
There are more apartment vacancies than before the pandemic
Many markets are experiencing high vacancy rates as a result of the number of new apartments under construction.
“According to the January vacancy index, the rate has reached 6.5 percent, its highest level since September 2020. As a result, there is good reason to believe that it may rise even further in the coming year,” the report concludes.
Lastly, rent growth may turn positive again next month despite the typical winter dip nearing an end. The robust construction pipeline should deliver strong supply growth throughout 2024, even when positive rent growth returns.
“As consumer sentiment about broader macroeconomic conditions improves in the year ahead, rental demand may also rebound, but likely not to the extent that would outweigh all the new supply,” Apartment List economists write.
