National rents dipped again in November dropping 0.8% and experts expect them to continue to fall in coming months, Apartment List says in the December report.
Nationwide rent fell $12 to $1,382, and “we’re likely to see that number dip one more time before the year ends,” the Apartment List research team says.
The analysis says, “The seasonal declines in rent prices that take place during the fall and winter have been steeper than usual and seasonal increases of the spring and summer have been milder. As a result, apartments are on average slightly cheaper today than they were one year ago.”
What is happening is that the influx of new supply has collided with softer demand over the past two years. This has caused rents to increase modestly during the peak moving season, and have seen more pronounced dips during the off-season.
Still, national rents are $200 a month higher than just a few years ago.
Overall rents are down 0.6% year-over-year as November brought the fourth consecutive and largest monthly dip of the off-season.
In November 88 of the nation’s 100 largest cities saw rents fall, in line with the broader national trend. But on a year-over-year basis, rent growth was negative for just 47 of these cities, as more individual markets gradually return to positive rent growth.
“We are likely to see continued price dips to close out the year, as property owners offer modest discounts to fill vacancies during a time of year when fewer renters are looking to move,” Apartment List says.
Apartment vacancies remain elevated
The Apartment List national vacancy index continues trending up slowly and sits at 6.8 percent, the highest reading since the onset of the pandemic
This rise in the vacancy rate is coming on the heels of the strongest quarter for new apartment completions in five decades as 180,000 thousand new apartments hit the market in the third quarter, a 21 percent increase over the previous quarter and the most since 1974.
However, keep in mind vacancy trends can be highly localized.
Conclusion
Rents should continue to dip for the remainder of the year.
Rent increases are currently being moderated by a robust construction pipeline that has already delivered a decades-high number of new apartment units in 2024, with considerable runway still to go in the boom.
“While rental demand has bounced back a bit this year, recent signs of labor market softness could dampen demand going forward. With this in mind, we expect that new supply will continue to outstrip demand into 2025,” Apartment List researchers say.
