Investing.com -- The median asking rent in the U.S. fell 1% year over year to $1,625 in April, marking the most significant decline since February 2024, according to a report from Redfin (NASDAQ:RDFN), a technology-powered real estate brokerage. This is $80 lower than the record high of $1,705 set in August 2022.
On a monthly basis, the median U.S. asking rent rose 1.2% in April, which is typical for this time of year. "Asking rents are sluggish because there are more apartments for rent than people who want to rent them," said Sheharyar Bokhari, Senior Economist at Redfin. He attributed the growth in apartment supply to the surge in multifamily construction following the pandemic.
The rental vacancy rate for buildings with five or more units stood at 8.2% in the first quarter, tying with the previous quarter for the highest level since early 2021. Less than half of newly built apartments are getting rented out within three months, one of the lowest shares on record, contributing to the decline in asking rents.
Despite the recent fall, a longer timeline shows stability, with April marking the 14th consecutive month of minimal changes in asking rents. These changes contrast with the dramatic fluctuations during the pandemic, when asking rents rose by up to 17.7% and fell by as much as 4.1%.
In Austin, Texas, the median asking rent dropped 9.6% year over year to $1,399 in April, a decline of $400 from the record high. This was the largest percentage decrease among the 44 major core-based statistical areas (CBSAs) analyzed by Redfin. Other cities that saw significant declines include Minneapolis (-7.3%), Portland, Oregon (-5.3%), San Diego (-5.2%), and Raleigh, North Carolina (-5.2%).
The typical U.S. homebuyer now needs to earn over $50,000 more than the typical renter to afford monthly housing payments, due to record-high mortgage payments. This affordability gap is boosting demand for rentals.
The cities where asking rents rose the most include Cincinnati (8.7%), Pittsburgh (7.5%), Baltimore (5.9%), Birmingham, Alabama (5.8%), and Washington, D.C. (5.2%).
The median asking rent for 0-1 bedroom apartments fell 1.2% year over year to $1,481. For 2 bedroom apartments, it decreased 1.5% to $1,699, the largest decline since February 2024. And for 3+ bedroom apartments, it fell 1% to $1,999.
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