New construction continued to outpace demand
of ConsumerAffairsAnother housing metric shows renters continued to get some relief in December, even as homebuyers faced increasing affordability hurdles.
According to the latest Realtor.com December Rental Report, the rental market experienced its 17th consecutive month of declining rents, with a year-over-year decrease of 1.1%, bringing the national median asking rent to $1,695.
It was the first time since April 2022 that the median rent has fallen below $1,700. Danielle Hale, chief economist at Realtor.com, says the decline can be attributed to supply and demand.
"We are reaping the benefits of the multi-family surge in housing starts that lasted throughout 2023, but as starts and completions slow, we anticipate seeing more balance in the rental market ahead," Hale said in a statement.
Hale said this balance is a welcome change for renters, signaling an end to the pandemic-era rental market spikes.
The nationwide absorption rate, which measures the share of newly built rental units leased within three months of completion, has fallen to 55%, about the same as 2019 levels. This suggests a more balanced market, as the influx of new multi-family construction helps stabilize rent prices.
Rents have risen less than inflation
Since 2019, overall inflation has increased by 22.8%, while rents have risen by only 16%, highlighting the impact of increased housing supply on rent stabilization.
Despite the overall trend towards balance, affordable rentals continue to show stronger demand than their pricier counterparts. The absorption rate for affordable apartments stands at 56.3%, compared to 53.8% for more expensive units, underscoring the persistent need for affordable housing options.
As the rental market continues to adjust, renters may find relief in the form of more stable prices and increased availability, particularly in regions where new construction has been the strongest. However, the report said the demand for affordable housing remains a critical issue, highlighting the need for continued focus on developing accessible rental options.
Photo Credit: Consumer Affairs News Department Images
Posted: 2025-01-23 12:08:31
