- Redfin said average US rents saw their biggest annual decline since March 2020.
- Renters have more options as there are more vacancies and there has been a decline in people willing to relocate.
- But rents varied geographically, with the West seeing a decline of 2.1%, while other areas saw increases.
Rent prices fell the most in more than three years in May, as changes in housing market supply and demand tipped the scales against landlords.
According to a Redfin report, the median US rent last month was $1,995, down 0.6% from a year ago and the biggest annual decline since March 2020, when the COVID pandemic pummeled the housing market. The decline on a revised basis is also the first annual decline since March 2020.
Redfin said, “Rents have cooled partly because the number of rentals on the market has increased, giving landlords less leeway to raise prices as they grapple with a rise in vacancies as renters choose to stay.” There are more options for.”
That’s partly because homeowners are electing to rent out their properties rather than sell them, given the recent jump in 30-year fixed mortgage rates, according to Real Estate Data Tracker.
A Redfin real estate agent in Sacramento, California, said, “Many homeowners are deciding that instead of selling, they are going to renovate their current home or rent it out while they look for market improvements.” are waiting.”
Additional rentals are also being supplied from builders. Redfin saw an increase in completed multifamily construction projects, adding tenant options. In April, the volume of such units grew by 24.2% year-on-year.
Meanwhile, rental demand is low because fewer people are moving amid economic uncertainty, weak home construction, still-high rents in many markets, and inflation, according to Redfin.
To be sure, rents rose 1.4% from last month and annual changes varied geographically, with the West seeing a 2.1% year-over-year decline while other areas saw increases.
The West is also the leader in new multifamily housing, with 440,000 new homes being built in the first quarter. This is compared to approximately 200,000 completed constructions in each of the remaining sectors.