Tight housing inventory forced more prospective homebuyers into the rental market in June 2021, driving the nationwide median rent price to a new high of $1,575, an 8.1% increase year-over-year, according to Realtor.com’s Monthly Rental Report. Additionally, rental prices in 44 of the 50 largest metros broke new records led by Riverside, California; Memphis, Tennessee; Tampa, Florida; and Phoenix, Arizona, which posted gains above 20% year-over-year. The report found that the U.S. median rent is now $118 more than it was two years ago.
"The surge we're seeing in rental prices is likely to exacerbate the K-shaped, or uneven, nature of the pandemic recovery in the U.S.,” said Realtor.com Chief Economist Danielle Hale. “Rents are rising at a faster pace than income, which is adding to the challenges faced by lower-income Americans as they struggle to recover from job losses and other hardships brought about by COVID. Looking forward, rents aren't expected to slow unless we see a fundamental shift in the number of homes for sale and for rent."
The 3.2% price growth in June over the month of May was more than just the usual seasonal trend of increasing summer rents. Rents typically fluctuate by less than 1% on a monthly basis. In June, rents in all but two of the 50 largest U.S. metros posted month-over-month gains of 1% or higher. Miami topped the list at an increase of 7.7% over May, a gain that would be exceptional over the course of 12-months, let alone one.
The spike in demand for housing is putting pressure on markets already challenged by availability and affordability. Similar to the shortage of home available, the number of homes available to rent is historically low, driving competition and surging rental prices. In June, rents in 44 of the 50 largest U.S. markets hit the highest levels seen in the past two years. Additionally, nearly half of these metros posted month-over-month gains at or above the unusually high national rate.
The desire for larger living spaces increased during the pandemic, as remote workers sought work spaces and spots with larger square footage for the family. This trend continued to play out in June as two-bedroom rents increased at the fastest pace of all unit sizes, up 10.2% year-over-year to a new high of $1,770. Two-bedroom rents were up 13.6% in June compared to 2019, rising $212 per month in just two years.
Although the gap between two-bedroom rents and smaller unit sizes is getting larger, one-bedroom (+8.0%) and studio (+4.0%) rents also posted significant gains in June, with one-bedroom rents reaching a new high of $1,466. More common to crowded cities, studios saw the steepest declines during COVID but are finally catching up with the overall rental market recovery. In June, studio rents rose 5.8% over 2019 to a new two-year high of $1,294.