In October 2022, the U.S. rental market experienced single-digit growth for the third month in a row after nine months of slowing from January’s peak 17.4% growth. The median rent growth across the top 50 metros slowed to 4.7% year-over-year for 0-2 bedroom properties. It is the lowest growth rate in 18 months but is still nearly 1.5 times faster than the growth rate seen just before the pandemic hit in March 2020. The median asking rent was $1,734, down by $25 from last month and $47 from the peak.
The deceleration from recent highs is consistent with what we have seen in recent for-sale data, suggesting that more typical seasonal cooling is returning to the rental market. During the late fall and early winter, rental demand typically slows as fewer households move. In addition, with the mortgage rate for a typical 30-year fixed-rate loan hovering around 7% and inflation running at a forty-year high, homebuilding activity continues to lean into multi-family properties. This increases the supply of rental properties shifting market balance, helping to temper rent growth. In fact, the recent uptick in the rental vacancy rate is additional evidence that demand does not outmatch rental supply as it has in the last 18 months.
Despite cooling rents, the Avail, by Realtor.com®, 2022 Fall Landlord and Renter Survey found that most renters have already absorbed recent rent increases. Three out of four renters (74.2%) who have moved in the past 12 months reported seeing their rent increase.
The strain from recent rent hikes isn’t exclusive to renters who have recently moved. Nearly two-thirds of renters (63.2%) who have lived in their current rental between 12 and 24 months, and likely renewed their lease, have also reported increases in their rent. The share of these renters who have seen rent rise is up significantly from July, when 52.2% reported rent increases. These renewing renters saw a median monthly rent increase of $138, down from $160 in July.
Despite recent rent hikes, few renters report attempting to negotiate with their landlords for a smaller rent increase, and even fewer report negotiating successfully. About one-third of surveyed renters (34.7%) attempted to negotiate a smaller increase when their landlord most recently raised their rent. Of these renters, only 17.3% were able to secure a reduced increase (6% of all renters).
Many renters are also considering moving to find more affordability. Nearly 7-in-10 renters (69.5%) who have experienced a recent rent increase are considering moving to a more affordable rental, up from 66.2% in July. Those considering moving are looking for a 12.5% cost reduction, or about $200 per month for the median renter—up from 10.3%, or about $125, in July. Renters looking for more affordability by moving may struggle to find it, however. Those who moved in the past 12 months reported a median rent increase of $300 per month.
Renters who are interested in living in Sun Belt regions may feel a faster market cooling off than other parts of the country. According to Realtor.com® data, in October 2022, the year-over-year growth rate for 0-2 bedroom properties across Sun Belt metros was 1.8%, 2.9 percentage points lower than the national average. Similar to last month’s finding, metros with negative growth rates are all clustered in the Sun Belt regions. In October, rent declined in Riverside, CA (-4.7%), Sacramento, CA (-3.4%), Tampa, FL (-2.5%), and Las Vegas, NV (-2.5%) on a year-over-year basis for a second month. In addition, rents in New Orleans, LA (-3.7%), Phoenix, AZ (-1.6%), Atlanta, GA (-0.8%), and Memphis, TN (-0.7%) also experienced their first year-over-year dip since the onset of the pandemic. While Sun Belt markets have cooled faster than other parts of the country in recent months, the median asking rent in the region was still 28.6% higher than three years ago (pre-pandemic), higher than national rent growth for the same three-year period (23.6%).
In October, two-bedroom units saw a single-digit growth rate for the third month in a row. The median rent continues to drop, down by $41 from last month and $83 from July’s peak. The median rent for two bedrooms was $1,901 nationally, $67 (3.7%) higher than the same time last year and up by $377 (24.7%) compared to three years ago.
Rent growth for one-bedroom units also kept cooling. The median rent for 1-bedroom units was $1,611, down by $36 compared to last month and $54 less from the peak. However, it is still up by $69 (4.5%) compared to the previous year and 23.2% ($303) higher since October 2019 (before the Covid-19 pandemic).
In October 2022, studios saw the first single-digit growth rate in 14 months. The median rent for studio units was $1,457, down by $26 compared to last month and $41 from the peak. Nevertheless, it was still up by $92 (6.7%) year-over-year and $225 (18.3%) higher than three years ago.
Overall
18.3%
23.2%
24.7%
Figure 2: National Rent Trend by Unit Size
Landlords have taken note of the changing rental market landscape, and are planning smaller rent increases than in previous quarters. According to the Avail, by Realtor.com®, 2022 Fall Landlord and Renter Survey, 70.4% of surveyed landlords still plan to raise the rent of at least one of their rental units within the next 12 months, though that figure is down from 72.1% reported in both April and July.
While most landlords are still planning to raise the rent, only 18.3% expect to increase it by more than 10%, down significantly from 25.4% of surveyed landlords in April. Meanwhile, the share of landlords expecting to raise rent by less than 5% climbed to 34.1%, up from 28.5% in July. Among these landlords, four in five (80%) indicate that increasing cost of ownership has impacted their plans to raise rent, while 80.1% cited changes in rental market prices in their area as having influenced their decision-making.
Though planned increases are cooling, most landlords are not willing to negotiate with tenants over rent prices. According to the survey, only 17% of landlords report being somewhat likely (14.4%) or extremely likely (2.6%) to allow a new renter to negotiate over the price of rent. But for renewing tenants, landlords are slightly more flexible, with 21.9% reporting being somewhat likely (17.5%) or extremely likely (4.4%) to negotiate on rent price.
Avail, by Realtor.com®, offers a growing library of resources to help independent landlords effectively manage their rental properties. Landlords can access free rental forms, in-depth guides, housing research, and more from one convenient location.
Ongoing financial challenges have resulted in a decline in renters considering purchasing a home in the next 12 months. Less than one-third of renters (32.3%) plan to pursue home ownership in the coming year, down from 34.6% in July. Among these renters, 83.9% indicate that inflation and rising interest rates impacted their plans—up from a reported 80.8% in July 2022. Those not planning to purchase a home most frequently cite not having enough savings for a down payment (44.4%) or believing they would not qualify for a mortgage (19.6%).
Among renters who said their plans have been impacted by rising interest rates and inflation, 67.5% are considering delaying the purchase of a home and continuing to rent instead. However, the median renter household reported no increase in how much they can save per month ($100), consistent with survey findings from July. This lack of improvement in renter household finances may continue to cause renters to reassess their plans to purchase a home.
Realtor.com® provides renters a rent vs. buy calculator to help them decide whether buying makes sense. The calculator can help renters estimate the length of tenure needed for buying to make more financial sense than renting and allows renters to customize for location and tax specification.
Methodology
Rental data as of October for units advertised as for-rent on Realtor.com®. Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, 1-bedroom, or 2-bedroom units. We use communities that reliably report data each month within the top 50 largest metropolitan areas. National rents were calculated by averaging the medians of the 50 largest metropolitan areas. Realtor.com® began publishing regular monthly rental trends reports in October 2020, with data history stretching back to March 2019.
With the release of its August 2022 rent report, Realtor.com® incorporated a new and improved methodology for capturing and reporting more comprehensive rental listing trends and metrics. The new methodology is expected to yield a cleaner, more representative, and more consistent measurement of rental listings and trends at both the national and local levels. The methodology has been adjusted to better represent the true cost of primary housing for renters. Most areas across the country will see minor changes with a smaller handful of areas seeing larger updates. As a result of these changes, the rental data released since September 2022 will not be directly comparable with previous releases (files downloaded before September 2022) and Realtor.com® economics blog posts. However, future data releases, including historical data, will consistently apply the new methodology.
The Avail, by Realtor.com®, 2022 Fall Landlord and Renter Survey collected responses from a nationally representative sample of more than 2,700 independent landlords and renters. The survey was conducted between November 1st, 2022, and November 9th, 2022. The margin of error for independent landlords is ± 3.1%, and ± 2.4% for renters. Avail, by Realtor.com®, regularly conducts rental market research to understand the needs of independent landlords and their renters. Visit the Avail Housing Research page and join the special reports mailing list to stay up-to-date on news, trends, and insights into the independent rental market.
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