For the first time since November 2021, U.S. median monthly rents failed to notch a new record high and even fell a little compared to the previous month — by $10, to $1,771, according to a report on August rental conditions from Realtor.com.
But renters, don’t go breathing a sigh of relief quite yet.
While the pace of year-over-year rent increases appears to be slowing — last month marked the first period of single-digit annual rent growth in 13 months, as well as the first slide in median asking rents since last November — tenants are still struggling under higher-than-usual housing costs.
The median rent growth for 0-2 bedroom units over the 50 metropolitan areas examined by Realtor.com slowed to 9.8% year over year, but rents still grew three times as fast as before the pandemic.
Rents fell slightly — by 0.1% — in August from July for the first time since November 2020, a separate report from real-estate research company CoStar Group found.
The power of wage increases earned during the tight labor market has also been diminished by the worst inflation rate in decades. Meanwhile, credit-card balances are increasing and the personal savings rate is declining.
Renters earning a typical household income were putting 26.4% of their money toward housing in August, compared with the 25.7% they spent last year, Realtor.com’s report said. That means they’re marching closer to the edge of a common affordability standard: spending no more than 30% of one’s monthly income on rent.
“Our analysis underscores the very real rental affordability challenges that many Americans face today. Rents are significantly higher than in previous years and are taking up a substantial portion of incomes, which are growing at a slower pace than inflation,” Realtor.com Chief Economist Danielle Hale said in a statement.
(Realtor.com is operated by News Corp NWSA, -0.59% subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)
A handful of cities were well past accommodating the 30% rule, too. Of the country’s top 50 metros, 9 had a rent share higher than 30% relative to the typical household income in August, Realtor.com said. In the most extreme case, tenant households with a typical household income in Miami could expect to put 46.5% from their monthly income toward a typical rental, with median prices at $2,626.
While median one-bedroom rental prices have predictably skyrocketed in some of the country’s most expensive cities year-over-year, hitting $3,930 in New York City and $3,040 in San Francisco this month, tenants in smaller cities like Fresno and Tulsa have also faced big increases of about 40%, according to separate research by Zumper, an apartment-rental website.
(Zumper’s data also shows rents in New York City, which boasts the highest prices in the country, vary by borough. The median rent for a two-bedroom in Brooklyn has jumped to $4,506, a staggering 61% year-over-year increase, while two-bedrooms in Manhattan are up 33%, hitting $5,283 in August.)
“Still, there are some bright spots for renters as of late,” Hale said in a statement. “Based on the general rule of thumb that you should keep housing costs to under 30% of your paycheck, renters were able to follow best practice in the majority of large metros in August.”
“Plus, as rent growth continued to cool, national rents didn’t hit a new record-high for the first time in nine months,” she added. “If these trends and typical seasonal cooling persist, renters may be better able to keep housing costs to a relatively manageable portion of their budgets in the months ahead.”