Rent in the U.S. fell in December, a third consecutive decline, amid increased supply of homes available for renting, according to real-estate platform Redfin.
The median rent that landlords ask from prospective renters fell nearly a percent to a little under $2,000 a month. The downtrend continued in December following a 2.1 percent fall in November, which was the largest such decline in three years. In October, rent ticked down by 0.3 percent, Redfin said.
"High supply—more so than low demand—is driving rent declines," Chen Zhao, Redfin head of economic research, said on the company's website.
Redfin pointed out that the housing market is seeing an increased number of new homes being built and also a jump in the completion of construction of new homes, which is giving renters options and forcing landlords to compete for their money.
Residential vacancy rates hit nearly 7 percent in the third quarter of 2023, up by more than half a percent from the same time a year before, according to data from the U.S. Census Bureau.
Renters in the south saw a percent in December compared to the same time a year ago, according to Redfin, while the western part of the country saw a little under a percent of price drops.
The Midwest, however, saw rent price asks shoot up by nearly 4 percent to a little over $1,400 for the month. The Northeast also witnessed a jump of nearly 2 percent to about a $2,400 a month in rent asks. Part of the reason these regions are seeing price increases may be due to the slower building of new homes compared to the West and South parts of the country, Redfin said citing data from the National Association of Home Builders.
"With rents falling and vacancies rising, now is a good time to shop around or try to renegotiate your rent if your lease is up—especially if you're a renter in the South or West," Zhao said on Redfin's platform.
A large chunk of Americans are renters, with more than 44 million of households in the U.S. made up of renters, according to data from the U.S. Bureau of Labor Statistics.
Experts say that with mortgage rates expected to stay elevated keeping homeownership beyond the reach of millions of Americans, the rental market may grow.
"The U.S. rental market is poised to grow in the future as homebuying remains unattainable for the average American due to the undersupply of the market, record-high prices, and interest rates," according to the data platform Statista.
But Redfin suggests that recent signals in the mortgage market that rates are falling may inadvertently lead to cheaper rent.
"If mortgage rates continue to drop at a fast clip in 2024, slowing rental demand couldbecome a major driver of rent declines," Zhao said. "That's because more Americans would ditch the rental market to become homeowners, leaving landlords with even more vacancies."
Uncommon Knowledge
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Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more
