The average nationwide rent is now $1,653, the highest since October 2022

Redfin reports U.S. rents rose nearly 1% in May, reaching $1,653 - Photo by Ethan Wilkerson on UnSplash

Sunbelt cities offer the most relief for renters, according to a new study

While home prices in some markets are going down, rents are mostly rising. The cost of housing, whether you are buying or renting, remains near an all-time high.

In a new report, real estate brokerage firm Redfin found rents in the U.S. rose by nearly 1% in May from May 2023. The average nationwide rent is now  $1,653 — the highest level since October 2022.

Redfin reports May marked the second consecutive increase, after rents climbed 0.9% in April. 

Rents have been on the rise since a surge in apartment construction during the pandemic pushed them lower. But since then, millions of Americans priced out of the housing market have absorbed the oversupply.

The good news is that there appears to be another apartment building boom underway, which Redfin predicts will limit future rent increases. But that may take a while.

Demand from young renters

“Demand from young renters remains high, as many of them are opting to stay put rather than contend with an increasingly unaffordable homebuying market,” said Redfin Senior Economist Sheharyar Bokhari. “But so far, rent price growth has been limited because there are enough new apartments to meet demand, even in the busiest time of year for the rental market.”

For the past three quarters, the rental vacancy rate has hovered at 6.6%. That’s the highest level since 2021, though it’s worth noting that the vacancy rate is no longer growing like it was during the pandemic.

And even though asking rents rose in May, they are fairly stable compared to recent years. Rents rose as much as 17.5% year over year during the pandemic and then fell as much as 4.1% in the summer of 2023. The median asking rent in May was just $47 below August 2022’s record high of $1,700, posing affordability challenges for some renters.

However, rents are not rising everywhere. The biggest declines were in Jacksonville, San Diego, Austin, Seattle and Phoenix. Those markets were among the most expensive during the pandemic and, while still expensive, are less so now.

Washington, D.C. had the biggest rent increase in May, rising 11.1% year-over-year. Cincinnati, Chicago, Virginia Beach and Minneapolis also had double-digit increases.

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