Apr 17, 2023 - Economy
Home rents just posted an annual decline for the first time since March 2020
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It's happening. Rents are coming down, for realsies. The median U.S. asking rent fell 0.4% year over year to $1,937 in March, per a Redfin analysis.
Why it matters: It's the first annual decline since March 2020, when, well, you know.
What's happening: It's a supply and demand story.
- Demand is falling because people appear to have reached their price limits. Rents are still 20% higher than they were right before the pandemic, overall inflation is hurting and there's growing economic uncertainty.
- Supply is rising because hundreds of thousands of newly constructed multifamily apartments came on the market last year, at a record pace, per an analysis of Census data on new residential construction, conducted by the Joint Center for Housing Studies of Harvard University.
Reality check: This doesn't mean everyone can suddenly afford a better place to live. Rents are still historically high.
- And they're not falling everywhere. While they're down 9% from last year in Chicago and 11% in Austin, rents are still soaring in Raleigh (up 17%) and Cleveland (15%). (See the full lists here.)
- Meanwhile, a lot of that new construction is in high-cost rentals, as the Center notes.
Go deeper: More signs are emerging that rent inflation has peaked
