The highest gain since December 2022 occurred in August, when the median asking rent in the U.S. increased 2.6% ($45) year-over-year to $1,790. This is according to a recent Redfin report. It is currently only $70 behind the record high set in the summer of 2022, according to the recent research.
After about two years of falling or flat rentals, August was the third consecutive month of year-over-year rises. In August, the median asking rent increased by 0.3% month-over-month. Due to cooling supply and strong demand, which is partly caused by high homebuying costs, rents are increasing.
“Apartment construction boomed during the pandemic, but many of those projects have since wrapped up and fewer new ones are breaking ground,” said Sheharyar Bokhari, Senior Economist at Redfin. “Builders are pumping the brakes due to high financing costs, elevated construction expenses and weaker investor appetite. With fewer new apartments coming on the market, renters have fewer options to choose from and landlords are regaining the ability to raise prices.”
New Construction Serves as a Buffer for Renters
In July, when figures are available, the number of new flats constructed dropped to a seasonally adjusted annual rate of 385,000. Compared to a peak of 705,000 in August 2024 following the pandemic building boom, that is a 45.4% decrease. According to a separate Redfin survey released last month, apartment building permits are also declining, down more than 20% since the epidemic construction boom.
Renters have been successful in requesting concessions like free parking or lower rent in many regions of the nation, but as supply decreases, those benefits may become less available.
The largest increase among the 42 major core-based statistical areas (CBSAs) Redfin examined was Chicago, where the median asking rent increased 10.7% year over year to $2,275 in August. The next-largest rise was 10.6% in San Jose, CA, followed by 9.9% in Philadelphia, 9.8% in Pittsburgh, and 8.7% in Washington, D.C.
Additionally, just three metros saw declines:
- Austin, Texas (-3.1%)
- Louisville, KY (-2.4%)
- Jacksonville, FL (-1.9%)
In conclusion, The largest increase since September 2022 occurred in August, when the median asking rent for apartments with 0–1 bedrooms increased 4.4% year over year to $1,650. It rose 3.6% to $1,920 for two-bedroom flats, which is also the biggest increase since September 2022. Additionally, the price of apartments with three or more bedrooms was unchanged at $2,199, down 0.0% year over year for the first time in five months.
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