Rents grew by a minute 0.3% in April to a year-over-year price of $1,967, the 11th consecutive month of slowing rent growth according to a new report from Redfin. That compares to a revised increase of 1.4% one month earlier and a 16% increase one year earlier.
On a monthly basis, median asking rents fell 0.2%, which is particularly notable because rents typically rise at this time of year.
Rental and apartment construction has created an ever-expanding pool of rentals which has been a major contributor to the slowdown in rent price growth. The multi-family construction boom has increased the number of units available, causing landlords to grapple with what to charge for rent compared to the number of vacancies.
Completed residential projects in buildings with five or more units jumped 60% year over year on a seasonally-adjusted basis to 484,000 in March—the most recent month for which data is available. There are only three other instances since the 1980s when completions were higher. The rental vacancy rate ticked up to 6.4% in the first quarter—the highest level in two years.
“The balance of power in the rental market is tipping back in tenants’ favor as supply catches up with demand. That’s easing affordability challenges and giving renters a little wiggle room to negotiate in some areas,” said Redfin Deputy Chief Economist Taylor Marr. “The market has become more balanced, but the scales could tip back in favor of landlords if homebuilders pump the brakes on new construction in response to slowing rent growth.”
According to Redfin, rent growth is also slowing because more renters are choosing to stay put due to the lack of inventory in the housing market. Renters are also choosing to stay put due to economic uncertainty, high single-family rental costs in many markets, and inflation, which is causing the price of goods and services to skyrocket.
By the numbers, rents fell the most in these 10 cities:
- Austin, Texas (-14.3%)
- Phoenix (-9.6%)
- Las Vegas (-7.1%)
- Oklahoma City, Oklahoma (-6.4%)
- Chicago (-6%)
- Birmingham, Alabama (-4.5%)
- Sacramento (-4%)
- Memphis, Tennessee (-3.6%)
- Seattle (-3.2%)
- Dallas (-2.8%)
“A lot of renters took on roommates or moved in with family when rents increased dramatically during the pandemic, which left more rentals and fewer renters needing places,” said Van Welborn, a Redfin Premier real estate agent in Phoenix. “Landlords who increased prices too quickly are now feeling the impact as the market calms and rents decrease to more reasonable levels.”
According to Redfin, rents climbed the most in these cities:
- Providence, Rhode Island (16%)
- Raleigh, North Carolina (12.4%)
- Indianapolis, Indiana (10.9%)
- Charlotte, North Carolina (10.5%)
- Cleveland, Ohio (9.7%)
- Columbus, Ohio (8.3%)
- Kansas City, Missouri (8%)
- Milwaukee, Wisconsin (8%)
- Pittsburgh (7.9%)
- Nashville, Tennessee (7%)
Click here to see the report in its entirety.