The rental market closed out 2023 with a seasonal rent dip for the fifth straight month of negative rent growth as the nationwide median rent fell by 0.8 percent to $1,379, Apartment List says in its January report.
The recent declines are in line with the rental market’s typical seasonal rent dip pattern, as fewer renters are looking to move at this time of year, “although this year’s dip has been a bit sharper than what we normally see,” the report says.
Despite the recent cooldown, the national median rent is still nearly $250 per month higher than it was three years ago, although that time frame was part of the pandemic.
Rents are down 0.8% month-over-month, down 1% year-over-year
Rent growth follows a seasonal pattern – rent increases generally take place during the spring and summer, whereas the fall and winter usually see a modest price dip.
“We are now squarely in the midst of the rental market’s off-season, as reflected in recent price trends. Rents began to dip last August, and have now fallen for five straight months as of December’s 0.8 percent decline.
As nationwide rent growth was negative in December, so too was local rent growth in the majority of large cities across the county,” the report said. And, “83 of the nation’s largest 100 cities saw prices fall month-over-month, and in 60 of these cities, prices are down year-over-year.”
Apartment vacancies are back above pre-pandemic levels
The Apartment List national vacancy index stands at 6.5 percent, slightly higher than the pre-pandemic average.
“This represents the culmination of vacancies gradually easing for two full years after a historic tightening in 2021. And with the construction pipeline of new apartments still near record levels, we expect that there will continue to be an abundance of vacant units on the market in the year ahead,” the report says.
Portland, Seattle and San Francisco among slowest in rent growth
The Portland and San Francisco metro areas are also experiencing some of the nation’s slowest year-over-year growth, showing that high-cost coastal metros are also seeing a slowdown in rental demand. The Midwestern and Northeast rental markets have maintained positive rent growth.
Over the longer three-year period, the fastest rent growth is still found in the Sun Belt – even as many metros there have cooled in 2023. The Miami metro tops the list with a three-year rent growth of 35 percent, while the Tucson and Tampa metros round out the top three.
Will rental market rebound in typical seasonality?
“Our national rent index is likely to fall for at least one more month before rebounding in line with the market’s typical seasonality. Looking further ahead, a robust construction pipeline should drive strong supply growth throughout 2024. On the other hand, the extent to which demand rebounds or remains sluggish will likely depend on broader macroeconomic conditions,” the report says.