As prices on everything increase across the board, more and more are turning to renting—either by circumstance or by choice.
Renting has traditionally been the cheaper option for those looking for housing, but as housing prices started their charge upwards in 2020, rent kept pace, consistently posting rent increases. But according to Realtor.com, August 2022 marks the first time in the past 13 months that rent growth has slowed to single-digit numbers.
According to Realtor.com’s Monthly Rental Report, the median asking rent in the top-50 metropolitan areas declined by a meager $10 to $1,771, but it was a decline, nonetheless.
“It is the first time we have seen rents decline since last November, perhaps a sign that more typical seasonal cooling is returning to the rental market, like we’ve seen in recent for-sale data,” Realtor.com wrote in their report. “Despite these encouraging indicators for renters, real affordability challenges persist, and inflation (8.3%) continues to outpace annual wage growth (5.2%), evaporating real gains employees might see from an otherwise strong labor market.”
Looking at specific apartment configurations in August 2022, two-bedroom units saw a single-digit growth rate for the first time in the past 14 months, and the median rent has cooled from last month’s peak, down by $20. The median rent for two bedrooms was $1,964 nationally, $163 (9.1%) higher than the same time last year and up by $370 (23.2%) compared to two years ago.
One-bedrooms apartments growth also fell to single-digit rate in August for the first time in 13 months. The median rent for 1-bedroom units was $1,653, down by $2 compared to last month, but up by $141 (9.3%) compared to the previous year and 22.6% ($305) higher since August 2020.
Outpacing their counterparts, studio apartments growth remains faster than one- and two-bedroom configurations. In August 2022, the median rent for studio units was $1,489, down by $9 compared to last month. Nevertheless, it was still up by $158 (11.8%) year-over-year and $261 (21.2%) higher than two years ago.
"Our analysis underscores the very real rental affordability challenges that many Americans face today. Rents are significantly higher than in previous years and are taking up a substantial portion of incomes, which are growing at a slower pace than inflation," said Danielle Hale, Realtor.com’s Chief Economist. "Still, there are some bright spots for renters as of late. Based on the general rule of thumb that you should keep housing costs to under 30% of your paycheck, renters were able to follow best practice in the majority of large metros in August.”
“Plus, as rent growth continued to cool, national rents didn't hit a new record-high for the first time in nine months. If these trends and typical seasonal cooling persist, renters may be better able to keep housing costs to a relatively manageable portion of their budgets in the months ahead."
Click here to view the report in its entirety, including breakdown of rent for the top-50 metropolitan areas.