Realtor.com® December Rental Report: Price Peak Behind Us as Rents Continue to Fall at Year’s End
In December, U.S. median rents dropped (-0.4%) for the eighth month in a row and across all-sized homes
The U.S. rental market experienced a noticeable shift in momentum in 2023 and closed out the year with eight straight months of year-over-year price declines, according to the Realtor.com® December Rental Report. While rents are overall up from pre-pandemic levels, an uptick in supply from a building boom in recent years means 2023 didn’t see a new peak in rent prices from their 2022 highs.
In December, the median asking rent for 0-2 bedroom properties in the 50 largest metros dipped to $1,713, down $7 (-0.4%) from the prior December and down $63 (-3.5%) from its July 2022 peak. Median rents declined across all unit sizes, and most notably in Western metros, but are still $309 (22.0%) higher than the same time in 2019.
“The rental market took a turn in 2023 as an influx of new multi-family apartments coming to the market exerted downward price pressure on median asking rents, which resulted in eight consecutive months of year-over-year price declines as we closed out the year,” said Danielle Hale, Chief Economist at Realtor.com®. “Amid high inflation and costs, softening rental prices throughout 2023 offered renters a small reprieve, and looking forward, Realtor.com® anticipates continued weakness in the rental market for 2024, as a much-needed supply of apartment units continues to come onto the market and further impacts market dynamics.”
December 2023 Rental Metrics by Unit Size – National
| Unit Size | Median Rent | Rent YoY | Rent Change – Dec 2019 |
| Overall | $1,713 | -0.4 % | 22.0 % |
| Studio | $1,437 | -1.0 % | 16.7 % |
| 1-bed | $1,593 | -0.7 % | 21.7 % |
| 2-bed | $1,896 | -0.4 % | 24.8 % |
Supply exceeds demand in West, South and pushed down prices, while Northeast, Midwest see the opposite
Regionally, rental trends in December mirrored patterns seen in October and November. In the West and South, supply exceeded demand, leading to a decrease in rents, while markets in the Northeast and Midwest experienced more rental demand compared to supply, resulting in sustained rent growth.
In December 2023, the median rent in the West was 1.6% lower than a year ago. Big metros such as San Francisco (-2.8%) and Los Angeles (-3.5%) continued to see year-over-year rent declines. While rental demand in the South remains vigorous, heightened supply from a substantial 32.0% growth in annual multifamily completion rates from January–October 2023 contributed to a downward push on rent prices, resulting in an overall decline in rental costs. The median asking-rent for 0-2 bedroom properties in the South was -0.5% lower than one year ago. Orlando, Fla. (-6.2%), Austin, Texas (-5.4%) and Dallas (-4.7%) saw the most significant year-over-year rent declines.
In contrast, rents in populous Northeastern metros such as New York (6.2%) and Boston (6.3%) continued to experience faster growth, likely the result of heightened demand from a robust labor market and slower growth in new multi-family home construction in the region. Midwest metros, bolstered by relative affordability, were up 2.0% from the same time last year. Specifically, Milwaukee (5.0%), Cleveland (4.7%), Indianapolis (2.8%) and St. Louis (2.8%) emerged as the top-performing markets in the Midwest with the fastest year-over-year price growth.
SOURCE Realtor.com
