The U.S. rental market dropped to its lowest annual pace (+7.8 percent) since June 2021 last month, according to the Realtor.com Monthly Rental Report. Additionally, the U.S. median rental price posted its second month-over-month decline in eight months in September.
Rent growth for larger units also cooled in September, with two-bedroom ($1,941) and one-bedroom ($1,647) median rental prices both rising at a single-digit year-over-year pace for the second month in a row, up 6.4 percent and 7.7 percent respectively.
“After more than a year of double-digit yearly rent gains and nearly as many months of record-high rents, it’s especially important to see consistency before we confirm a major shift like the recent rental market cooldown. But September data provides that evidence, as national rents continued to pull back from their latest all-time high registered just two months ago,” said Realtor.com Chief Economist Danielle Hale. “This return of more seasonal norms indicates that rental markets are charting a path back toward a more typical balance between supply and demand, compared to the previous year. We expect rent growth to keep slowing in the months ahead, partly driven by the impact of inflation on renters’ budgets. However, it’s unlikely that rents will return to a more normal pre-COVID pace of growth for at least another year, when available rental inventory starts to reflect the recent uptick in multifamily new construction.”
Yearly rent growth in September remained more than two-times faster than the yearly rate in March 2020 at the onset of COVID. Additionally, national rents were 24.8 percent higher in September compared to the same month in 2019.
Many Sun Belt metros showed the most significant rental growth moderation in September, while big tech cities were among the only large markets to post double-digit annual rent gains in September. San Jose, in particular, posted an annual gain of 10.7 percent.