An industry report suggests its all about supply and demand
of ConsumerAffairs
In a notable shift for renters across the United States, rental prices have continued their downward trajectory, marking the fifteenth consecutive month of year-over-year declines.
According to the Realtor.com October Rental Report, rents fell by 0.8% to an average of $1,720, with the most significant decreases observed in smaller-sized units.
Meanwhile, the National Association of Realtors reported that in October, the median home sale price for all housing types was $407,200, a 4% increase from October 2023. All four regions of the U.S. reported price increases.
Danielle Hale, chief economist at Realtor.com, attributes the trend offalling rent to the influx of new multifamily construction projects that began over the past two years.
"The greater supply of units is helping to soften rents and bring renters some relief," Hale said.
And Realtor.com expects rent relief to continue. Despite a projected decrease in the number of multifamily homes expected to be completed in 2025, the continued increase in supply is expectedto maintain downward pressure on rents.
The report found that from January to September 2024, the average seasonally adjusted annual rate of multifamily completions reached 606,000 units. Thats much higher than the 445,000 units completed during the same period in 2023.
By fall 2025, the rental housing stock is expected to rise by 1.1%, reaching over 49 million units, which represents a 6.7% increase from pre-pandemic levels in 2019.
The South is leading in rent affordability
Regionally, the South has seen the most new construction and it has led to notable declines in median asking rents in various cities. For instance, Memphis and Nashville experienced annual rent drops of 5.4% and 5.2%, respectively.
In the Midwest, Chicago saw a 4.1% decline, while Denver and Phoenix led the West with decreases of 5.6% and 4.5%, respectively. Conversely, large Northeastern metro areas like New York have seen slight rent increases due to slower growth in rental supply.
The October report also shows that units of all sizes saw declines in asking rents. The median rent for studios fell by 1.2% to $1,436, marking a 3.6% decrease from its peak in October 2022 but still 12.5% higher than five years ago.
One-bedroom units saw a 0.9% decline to $1,600, while two-bedroom units decreased by 0.7% to $1,908, both significantly higher than five years ago by 17.1% and 21.1%, respectively.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-11-26 12:10:34
