Realtor.com® May Rental Report: Slower Decline in Rents Indicates Inflation May Persist

Written by Posted On Tuesday, 11 June 2024 06:44

Median asking rent fell -0.7% in May, with declines across all unit sizes and pockets of increases in certain Midwest and Northeast markets

Rents dropped in May for the tenth consecutive month, though the pace of the decline has slowed since earlier this year, suggesting potential challenges for further reductions in overall inflation, according to the Realtor.com® Rental Report released today. This could potentially complicate the Fed’s policy decisions and also underscores the need for more housing construction, particularly in some markets where a lack of rental supply is contributing to higher prices.

The median asking rent nationally for 0-2 bedroom units fell by -0.7% ($13) from May of last year to $1,732, and declined across all size categories. That’s just $24 (-1.4%) below its August 2022 peak. Median asking rents have risen by 21.5% over the past five years. 

“Slowing rent growth preceded slower shelter inflation, and falling market rents – as we’ve seen in the last 10 months of Realtor.com® data – have furthered that deceleration in shelter prices,” said Danielle Hale, Chief Economist at Realtor.com®. “As a significant driver of overall inflation, shelter costs need to slow further and are expected to do so. However, waning market rent declines foreshadow smaller Consumer Price Index shelter declines ahead and put a question mark on whether we’ve seen enough to rein in overall inflation, complicating the Fed’s policymaking.”

CPI shelter index is “stickier”

Shelter costs have been a big driver of overall consumer cost increases. The Consumer Price Index for shelter, which includes rent of primary residence and the owners’ equivalent rent of residences, was up 5.5% year over year in April after rising 5.7% in March, and is down from a peak of 8.2% in March 2023. That government index typically lags behind market-based rent measures, like Realtor.com rent data, but recently that gap has widened, creating a “stickier” shelter index. It’s expected to drop further, but the pace of that decline has slowed since February, making it potentially more difficult for the overall inflation picture to improve. For renters, an uptick in housing construction to alleviate short supplies could help lower costs.

Rents drop in South and West, increase in Midwest and Northeast

The biggest year-over-year declines in median asking rent were seen in the South, led by Austin (-9.3%), Nashville (-8.3%) and San Antonio (-8.2%). There were also declines in the West, led by Phoenix (-4.5%), San Francisco (-4.3%) and Las Vegas (-4.1%). In other markets, strong labor markets stoked demand while the increase in supply of new units didn’t keep pace, pushing up rents. In the Midwest, rents rose in markets including Indianapolis (+4.4%), Milwaukee (+4.3%) and Minneapolis (+2.9%). In the Northeast, Pittsburgh (+2.4%) and New York (+2.2%) were among the markets showing an increase.

Rents decline across all size categories

Median rents for units of all sizes continued to fall in May. The median asking rent for studios nationwide fell by -1.9% on a year-over-year basis, to $1,449. That’s down -2.8% from the October 2022 peak but 17.3% higher than five years ago. Median rent for one-bedroom units fell -1.1%, the twelfth year-over-year decline in a row, to $1,612, which is still 20.3% higher than five years ago. And the median rent for two-bedroom units fell by -0.7%, the same rate of decline as last month, to $1,925. That was also the twelfth consecutive annual drop. Still, while two-bedroom rents were -1.4% below their August 2022 peak, they have risen by 23.3% over the past five years, a higher growth rate than seen in smaller units.

National Rental Data – May 2024

Unit Size

Median Rent

Rent YoY

Rent Change – 5 years

Overall

$1,732

-0.7%

21.5%

Studio

$1,449

-1.9%

17.3%

1-bed

$1,612

-1.1%

20.3%

2-bed

$1,925

-0.7%

23.3%

Rental Data – 50 Largest Metropolitan Areas – May 2024

Metro

Median Rent (0-2 Bedrooms)

YOY (0-2 Bedrooms)

Atlanta-Sandy Springs-Alpharetta, GA

$1,600

-5.8%

Austin-Round Rock, TX

$1,484

-9.3%

Baltimore-Columbia-Towson, MD

$1,769

-5.5%

Birmingham-Hoover, AL

$1,308

1.6%

Boston-Cambridge-Newton, MA-NH

$2,950

-1.5%

Buffalo-Cheektowaga, NY

NA

NA

Charlotte-Concord-Gastonia, NC-SC

$1,523

-5.0%

Chicago-Naperville-Elgin, IL-IN-WI

$1,839

0.7%

Cincinnati, OH-KY-IN

$1,367

1.9%

Cleveland-Elyria, OH

$1,224

2.7%

Columbus, OH

$1,184

-2.3%

Dallas-Fort Worth-Arlington, TX

$1,485

-3.7%

Denver-Aurora-Lakewood, CO

$1,928

-0.7%

Detroit-Warren-Dearborn, MI

$1,301

0.5%

Hartford-West Hartford-East Hartford, CT

NA

NA

Houston-The Woodlands-Sugar Land, TX

$1,385

-3.2%

Indianapolis-Carmel-Anderson, IN

$1,342

4.4%

Jacksonville, FL

$1,534

-4.1%

Kansas City, MO-KS

$1,310

-2.5%

Las Vegas-Henderson-Paradise, NV

$1,475

-4.1%

Los Angeles-Long Beach-Anaheim, CA

$2,775

-2.5%

Louisville/Jefferson County, KY-IN

$1,236

-2.5%

Memphis, TN-MS-AR

$1,224

-3.8%

Miami-Fort Lauderdale-West Palm Beach, FL

$2,393

-4.4%

Milwaukee-Waukesha, WI

$1,690

4.3%

Minneapolis-St. Paul-Bloomington, MN-WI

$1,533

2.9%

Nashville-Davidson–Murfreesboro–Franklin, TN

$1,517

-8.3%

New Orleans-Metairie, LA

NA

NA

New York-Newark-Jersey City, NY-NJ-PA

$2,857

2.2%

Oklahoma City, OK

$1,009

0.0%

Orlando-Kissimmee-Sanford,  FL

$1,672

-6.4%

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

$1,800

-0.4%

Phoenix-Mesa-Scottsdale, AZ

$1,538

-4.5%

Pittsburgh, PA

$1,484

2.4%

Portland-Vancouver-Hillsboro, OR-WA

$1,729

2.7%

Providence-Warwick,RI-MA

NA

NA

Raleigh, NC

$1,528

-3.4%

Richmond, VA

$1,487

-3.3%

Riverside-San Bernardino-Ontario, CA

$2,153

-1.7%

Rochester, NY

NA

NA

Sacramento-Roseville-Folsom, CA

$1,982

4.8%

San Antonio-New Braunfels, TX

$1,232

-8.2%

San Diego-Chula Vista-Carlsbad, CA

$2,886

-1.8%

San Francisco-Oakland-Berkeley, CA

$2,779

-4.3%

San Jose-Sunnyvale-Santa Clara, CA

$3,341

3.7%

Seattle-Tacoma-Bellevue, WA

$2,042

1.0%

St. Louis, MO-IL

$1,330

-1.8%

Tampa-St. Petersburg-Clearwater, FL

$1,742

-2.8%

Virginia Beach-Norfolk-Newport News, VA-NC

$1,533

3.2%

Washington-Arlington-Alexandria,DC-VA-MD-WV

$2,256

1.5%

Methodology 

Rental data as of May 2024 for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.

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