Residential Rent Rates Declined 1% YOY in May

Washington, DC, July 10, 2023-Nationwide, rents declined 1% from a year earlier in May-the largest drop since 2020- as a building boom increased supply and economic uncertainty cooled demand, reports Redfin. 

“The median U.S. asking rent fell 0.6% year over year to $1,995 in May-the largest annual decline since March 2020, when the coronavirus was declared a pandemic. That compares with a near-record 16.5% increase one year earlier. May’s drop also represented the first annual decline since March 2020 on a revised basis. The median asking rent rose 1.4% from a month earlier in May. 

“In the West, asking rents declined 2.1% from a year earlier-nearly four times the national pace. But other U.S. regions saw increases, with rents climbing 5.4% in the Northeast, 4.9% in the Midwest and 0.8% in the South, which we’ll discuss further in the next section.

“Rents have cooled in part because the number of rentals on the market has grown, giving landlords less leeway to hike prices because they’re grappling with a rise in vacancies as renters get more options to choose from.

“One reason rental supply has been growing is many homeowners are opting to rent their homes out instead of selling. Some have already moved into their next home, and are renting their previous home out to cash in on still-high rents and continue building equity on a house with a relatively low mortgage payment. The average 30-year-fixed mortgage rate is 6.8%, up from 5.09% a year ago and a record low of 2.65% in January 2021. The average monthly payment is $320 higher than it was at this time last year.”