Single-family rent prices in the United States experienced a 2.3% increase in July compared to the same month last year. This increase is a deceleration from the 3.1% mean growth rate seen one year ago. Rent growth is now below the lower bound of the pre-pandemic 10-year average of 3.0% – 3.9%. This transformation speaks to what has happened across the rental market, shifting the balance of power.
The low-end rental market saw increases of 1.6% in rental prices from last year in July. This represents a historic drop from the 2.8% jump in July 2022. This trend reflects a larger cooling in the rental market, after a period of growing strength earlier this year. “After a strong start to the year, single-family rent growth is clearly losing steam,” noted Molly Boesel, a leading analyst in the sector.
Chicago Rent has overtaken Chicago as the new rent growth leader with a pretty remarkable 5.1% growth. This jump is due to low inventory and high demand in the industry. Following in Chicago’s footsteps, Philadelphia and Washington, D.C. were next to see sky-high rent increases. Los Angeles rounded out the top five on the thinnest of margins. In a striking opposite example, Dallas and Miami had the least rent growth with Miami having zero rent growth.
The New York City metropolitan area showed impressive resilience in its rental market, posting a 3.7% rent increase. High-quality units across the country have seen an average rent increase of 2.9% since this time last year. This growth is a deceleration from the 3.2% increase in July.
Rent growth in July showed nearly the same rent growth as just 0.2% better than June. Looking back at history, we find that the average monthly growth for July is usually right around 0.7%. This means that rents are continuing to go up. The increase isn’t happening as quickly as it did in years past.
Even previously hot markets like Los Angeles — which had been propped up by the wildfire-related spike in demand — have begun to cool down. Chicago is the notable exception, topping the list across the nation for rent growth as inventory remains tightly constrained and demand stays strong. Boesel added.
The results tell a compelling and multifaceted story that is challenging for renters and investors to navigate. Rental prices are just now beginning to cool or reverse course in certain markets. This change may have significant implications for housing affordability and tenant displacement. Environmental justice analysts will be tracking these trends closely. Specifically, they seek to better understand how evolving economic conditions can shape emerging future rental demand trends nationally.