The average asking rent in October was $2,009, down 0.2% from September, double the usual rate of drop for that time of year, according to a Zillow rental market report.
While the end of summer and beginning of fall is commonly a time when rents decrease slightly, this year’s fall steeper reduction may be the latest sign that the rental market is continuing to soften. However, even with the slight tick down, rents are still up 3.3% year over year, and 33.5% higher since the beginning of the pandemic.
Multifamily rent growth has slowed in recent months as more apartment projects have come online. Zillow estimates that about 55,500 new apartments were completed in September, marking a 50-year high for this time of year. An influx of new apartments has kept multifamily rent growth at 2.3% for the past year, but it may slow even further as the year progresses.
Zillow’s Observed Renter Demand Index, which measures competition based on the number of renters relative to the number of available units, dropped to its lowest level ever in October. Rental vacancies have risen to 6.9% in the third quarter, and rental concessions have continued to reach record highs, with 37.7% of Zillow rental listings offering some form of concession in October. That equates to 33% of Zillow listings offering perks such as free parking, or even weeks of free rent to entice newcomers.
Rents for all properties fell month over month in 34 major metropolitan areas in October, with the largest decreases seen in San Antonio and Denver, where rents fell 1.1%. Austin was next with a drop of 1%, followed by Richmond, Virginia, (-0.9%) and Salt Lake City (-0.7%).
Even with the recent pullback, rents are still up from 2023 levels in 48 of the 50 largest metro areas. San Antonio and Austin were the only two major metro areas where rents were lower year over year. The highest annual increase was in Harford, Connecticut, where prices jumped 7.2%, followed by Cleveland with a 7% uptick, Louisville rising 6.4% and Providence, Rhode Island, up 5.8%.
The October asking rental price for single-family homes fell in 25 major metro areas, with the largest drops happening in Austin (-1%) and Boston (-0.7%). Both San Antonio and Seattle saw rents fall 0.6%. The average asking price for a single-family rental was unchanged in October at $2,215, but up 4.3% year over year. Cleveland, and Hartford, Connecticut, saw home rental prices rise the most, up 7.4%, followed by Buffalo (7.3%) and Louisville (7.2%).
When it comes to affordability, Zillow found that the median household would spend 28.9% of their income on a new rental in October, which was flat for the year, and 1.3% higher than before the pandemic.
