A “for rent” sign is posted in front of a home on Dec. 12, 2023 in Miami, Florida.
Joe Raedle | Getty Images
Rents for single-family residential homes rose just 1.4% in August compared with the year before, according to analytics and data firm Cotality, down from a 2.3% annual gain in July. That’s also much less than the 3% average gain seen last year and is the smallest increase in 15 years.
Rent growth weakened across all price points, continuing a trend that has persisted in the second half of this year. Rents had been strengthening in the first half of this year.
There were, however, strong variations regionally. Chicago saw the highest annual rent growth at 4.7% in August, followed by Los Angeles at 2.8%, Philadelphia at 2.7% and Washington, D.C., at 2.6%.
Dallas saw a 0.6% decline in rent growth, the lowest in the nation. Dallas recently had a surge of new multifamily apartments come onto the market, which is keeping supply higher than demand, Cotality said.
“Atlanta, Philadelphia and Los Angeles continue to show stronger rent growth, with Los Angeles now only slightly above its pre-wildfire level from January,” said Molly Boesel, senior principal economist at Cotality. “Los Angeles ranks second among the top 10 metros for rent growth, suggesting that local conditions such as recovery efforts, limited housing supply, and regional economic factors can still influence rental trends even as national price growth moderates.”
High-end properties are faring the best, with August annual rent growth at 1.6%. Low-end rent prices increased 1.1% from a year ago, but both are well off last year’s gains.
Multifamily apartment rents have also been cooling. That is largely due to a construction boom in the sector that delivered a record number of units in the past few years, with more coming on this year.
Apartment rent prices nationally were down 0.8% in September compared with the year before, according to a separate report from Apartment List. That drop, however, was slightly less than the annual dip in August. Rents had been going more and more negative for five straight months.
The national multifamily vacancy rate was 7.1% in September, a record high for that index, according to Apartment List.
“We’re past the peak of a multifamily construction surge, but a healthy supply of new units are still hitting the market, and vacancies are still trending up,” according to Apartment List researchers.
The national median monthly rent in September was $1,394, down $11 from September 2024, the report said. As rents continue to fall, albeit slowly, rents are now below their most recent peak in August 2022, or $48 a month cheaper.
“But that cooldown came following a period of record-setting rent growth, and the typical rent price remains 22% higher than its January 2021 level,” researchers wrote.
