Rents for one-bedroom and two-bedroom units declined again, year over year, but to a lesser degree compared to June. And studio rentals saw their first annual price decline since 2020.
Nationwide, rent prices are more affordable in July 2023 compared to a year ago. The typical for-rent home required 25.9% of the typical household income—down from 26.5% in July 2022.
That said, not every metro saw an improvement in rental affordability.
Renters in many areas are now spending slightly less on rent relative to their overall income, giving their budgets a little more breathing room at a time of stubborn inflation and ongoing affordability concerns. With our midyear forecast update noting a surge in multi-family construction and an uptick in vacancy rates, we anticipate this downward pressure on rent prices will continue, providing many renters with much-needed stability in their housing expenses. Given the current rental market momentum and seasonal trends, it will be very unlikely to see a new peak rent in 2023.
Danielle Hale - Chief Economist at Realtor.com®
RISING RENTAL SUPPLY IS SLOWLY IMPROVING RENTAL AFFORDABILITY
In Q2 2023, completions of non-single-family homes increased 26.7% year over year. Rental vacancies also rose 0.7 percentage points to 6.3% over the same period.
While those numbers are generally good news for renters, rental costs remain elevated, and the rental vacancy rate is still below the 7.3% average for 2013 to 2019.
Still, the median rent for the 50 largest metros has continued the decline that started in May of this year. In July, it dropped -1.0% across all 0-2 bedroom rental units—slightly less than the -1.1% annual drop seen the previous month.
Falling $18 below the peak set in July 2022, the median asking rent increased month over month by $15 to $1,759—24.75% or $348 higher than it was in July 2019.
STUDIO RENTALS SEE THEIR FIRST ANNUAL RENT PRICE DECLINE IN OVER TWO YEARS
Rent price trends varied a bit by unit size, with rents for two-bedroom units falling -1.1% year over year, slightly less than the -1.4% annual drop in June. Nationwide, the median rent for a two-bedroom unit was $1,945—down $21 from the peak set last July. But rent growth was highest for these larger units, climbing 26.9% or $413 over the past four years.
Rents for one-bedroom units fell -0.6% year over year in July 2023—slightly less than its 0.9% annual decline in June. The median rent for these properties was $1,642, down $10 from the peak set in July 2022 but still 24.9% or $327 higher than it was four years ago.
Studio rents declined year over year for the first time in over two years, dropping -0.4% compared to July 2022. The median rent for a studio was $1,445—down $6 from one year ago and $21 less than the peak set in August 2022. That said, it’s still $220 or 18.05% higher than it was four years ago in 2019.
