Rent prices fell slightly overall in January, but rose in some parts of US
The median price of rent fell overall in the U.S. in January, with declines in the West and South. Still, prices climbed in the Midwest as demand for housing drives up costs.
The asking prices for rent edged down overall in the U.S. for the sixth consecutive month in January, but not enough for renters to feel any relief given how much prices have surged in recent years – and in some places, rent is still climbing.
Realtor.com's January Rental Report released Thursday found median rents decreased 0.3% year-over-year last month, but noted that prices are still 18.3% higher than they were four years ago.
The median rent for studio apartments fell by 1% to $1,434, but remain up 11.95% from the same month four years prior, and the price of two-bedroom units dipped by a mere 0.6% to $1,892. The cost of a two-bedroom is up 20.4% from January 2020.
Rent for one-bedroom units actually rose last month by 0.1% on an annualized basis to $1,591, which is 17.9% higher than four years ago.
The report said prices in the Western U.S. fell by 0.3%, led by decreases in cities such as Phoenix (-4.0%), Riverside, California, (-2.6%) and Las Vegas. But some larger metros in the region saw rents climb, including Los Angeles (0.2%) and Seattle (1.3%), which saw rents increase last month year-over-year after eight months of declines.
The Southern U.S. saw prices fall overall, too, where median asking rent dropped by 1.2%, led by year-over-year declines in Memphis, Tennessee, (-5.5%), Atlanta (-3.8%), Austin, Texas, (-3.6%) and Miami (-3.4%). The report attributed the decline in rental prices in the region to a growing supply of new multifamily housing.
But in the Midwest, median asking rents rose last month by 0.2%, boosted by markets such as Chicago (4.2%), Indianapolis (3.5%) and Kansas City, Missouri, (3.1%).
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The report noted that those markets currently have low unemployment, which stokes rental demand. Still, Realtor.com pointed out, they remain affordable in comparison with other parts of the country: Chicago's median rent of $1,852 is almost $1,000 less than big-city counterparts New York ($2,844) and Los Angeles ($2,829).
"Rental prices are declining, especially in places where new units are entering the market, but there's still plenty of demand driven by the large population of renters, including potential first-time homebuyers who remain on the sidelines for now," said Danielle Hale, chief economist at Realtor.com.
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"Looking forward, Realtor.com anticipates the rental market to decline only slightly in 2024, as an increase in the supply of new units is balanced out by continued enthusiasm for renting as a more affordable alternative to purchasing," Hale added.