The winter rent dip continued in January with the sixth straight month of negative rent growth, as the nationwide median rent fell by 0.3 percent to $1,373, according to the February report from Apartment List.
“The recent declines are in line with the rental market’s typical seasonal pattern, as fewer renters are looking to move in the fall and winter, although this year’s dip has been a bit sharper and more prolonged than what we normally see,” Apartment List economists write in the monthly report.
On average apartments across the country are cheaper than they were a year ago.
However, prices are still high. The national median rent is still more than $200 per month higher than it was just three years ago.
“Regionally, rents fell in January in 73 of the nation’s 100 largest cities, and prices are down year-over-year in 53 of these 100 cities. The sharpest rent decline over the past year has been in Oakland, CA, where rents are down by 9.1% year-over-year. Boise, ID; Austin, TX; Atlanta, GA; Nashville, TN; and Portland, OR have all also seen rents fall by 5 percent or more,” the report says.
May be light at the end of the tunnel for rents
The January rent decline, while it was the sixth straight month of declines, was “modest compared to the declines we’ve been seeing in recent months, indicating that we’re approaching the end of the market’s slow season.
“Even though the timing of the recent slowdown has been in line with what we typically expect, its magnitude has been a bit more pronounced. The nation’s median rent has fallen by a total of 3.5 percent since last summer’s peak, the second sharpest seasonal dip that we’ve seen in the history of our index (going back to 2017).
Apartment vacancies are back above pre-pandemic levels
The number of new apartments under construction continues to push up supply in many markets impacting the vacancy index.
“As of January, our vacancy index sits at 6.5 percent, the highest reading since September 2020. And there’s good reason to expect that it could rise even further in the year ahead,” the report says.
While the typical winter dip is nearing an end, “it’s possible that rent growth could turn positive again as soon as next month. But even when positive rent growth returns, it should be moderated by a robust construction pipeline delivering strong supply growth throughout 2024.
“With consumer sentiment about broader macroeconomic conditions beginning to improve, it’s possible that rental demand will also rebound in the year ahead, but likely not to an extent that would outweigh the impact of all the coming supply,” the Apartment List economists write.