Home / Market Trends / Affordability / Rent Price Declines Help to Improve Housing Affordability
Print This Post Print This Post

Rent Price Declines Help to Improve Housing Affordability

According to the Realtor.com June Rental Report, new research found that rent prices dropped even further, down 1.0% year-over-year, offering some relief for renters. Meanwhile, the median asking rent in the 50 largest metros analyzed increased to $1,745, up by $7 from last month and down $31 from its July 2022 peak.

"The downward trend in rent prices continued in June, providing a much-needed respite for renters and an opportunity to regain some control over their housing expenses," said Realtor.com Chief Economist Danielle Hale. "With our midyear forecast update calling for slowing inflation, better-than-expected labor market performance, and an increase in multi-family supply, we're seeing some encouraging signs for renters' budgets as we enter the second half of the year."

June also marked the first year-over-year decrease in rent for one-bedroom units since 2020, reflecting the first such drop in rent for two-bedroom units in May.

Realtor.com data found that while continuing rent price declines are helping to improve affordability, rents remain significantly elevated—an estimated 24.1% higher than the same time in 2019. Rents for studios also continue to grow. The median rent for studios was $1,445, up by $14 (1.0%) year-over-year and $229 (18.8%) higher than four years ago.

Western Rents Dropped Further as San Jose Experienced First Decline 

Rent in Western metros continues to decline faster than other parts of the country (-3.8% Y/Y). San Jose, the last large western metro to show a decline in rental prices, saw its first year-over-year rent drop in nearly two years (-1.4%). In contrast, rents in northeastern hubs such as New York City (+4.7%) and Boston (+2.5%) continued to climb more quickly.

The strong labor market in the Northeast is likely driving demand, although increasing supply may help ease the upward pressure on rent prices. Rents in the Midwest are still climbing (+3.2%), due to greater affordability in the region. Of the Top 10 metros experiencing the most rent growth, half are located in the Midwest. Meanwhile, rents in the South (-1.3%) dropped lower than a year ago.

Rents in South Markets Declined

In June, the median asking-rent for 0-2 bedroom rental properties in the South was 1.3% lower than one year ago as the unemployment rate increased  just 0.1 percentage point.

The top 5 metros experiencing the most significant year-over-year rent declines are:

  1. Austin, TX (-8.6%)
  2. Dallas (-5.7%)
  3. Charlotte, NC (-5.0%)
  4. Tampa, FL (-4.7%)
  5. Orlando, FL (-4.6%)

Austin, Texas, being recognized as one of the prominent tech hubs in the United States, similarly to its counterparts in the West, saw the most significant decrease in median asking rents compared to the previous year. In addition, as the tech sector in Dallas, Charlotte, Tampa, and Orlando all experienced significant growth during the pandemic, their rent trends closely resemble those of their western tech peers.

Young people Choosing Metros That Offer Affordability, Tech jobs

Affordable rent and job prospects are key factors for young people choosing a place to live. Of the 10 metros with the highest share of young households and young renters (aged 25-34), Oklahoma City ranks as the most affordable, with younger individuals spending only 18.7% of their monthly income on the typical rental during June.

This age group, which makes up 30% of employees in the tech sector, according to our estimation from the Current Population Survey, is renting in areas with high tech growth, suggesting that tech jobs hold considerable appeal for young households. Six of the metros with the highest share of young renters also had higher-than-average annual growth in their tech sectors (+0.8%). Nine of the 10 experienced positive growth rates overall, led by Seattle (+3.9%), Orlando, FL (+2.8%), and Denver (+2.2%).

"The continuing declines in rental prices mark a promising shift for renters after months where many renters spent more than they could afford on housing costs," said Realtor.com Economist Jiayi Xu. "We expect to see rental prices continue to show small year-over-year declines through the end of the year."

In June, young families earning a typical household income devoted an average of 24.7% of their income to lease a typical for-rent home in these top 10 metros:

  1. Denver-Aurora-Lakewood, CO
  2. Columbus, OH
  3. Seattle-Tacoma-Bellevue, WA
  4. Nashville-Davidson–Murfreesboro–Franklin, TN
  5. Oklahoma City
  6. Austin-Round Rock, TX
  7. Dallas-Fort Worth-Arlington, TX
  8. Virginia Beach-Norfolk-Newport News, VA-NC
  9. Indianapolis-Carmel-Anderson, IN
  10. San Antonio-New Braunfels, TX

Some nine out of the 10 metros analyzed featured rental shares lower than the average of the top 50 metros at 27%. Among these top metros, Oklahoma City stood out as the most affordable location, with young families spending only 18.7% of their monthly income on the typical rental during June.

To read the full report, including more data, charts, and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].

Check Also

CFPB Releases Annual Report on Residential Mortgage Lending Activity

"The higher interest rate environment had profound effects on the mortgage market in 2022, with borrowers paying much more in monthly payments,” said CFPB Director Rohit Chopra. Click through to read more on the CFPB’s analysis of 2022 HMDA data.