Falling rents could help prospective buyers save up
Realtor.com's latest rental report found that rent prices across the U.S. dipped in September, continuing a five-month trend.
Rising home prices and mortgage rates continue to be a barrier for renters hoping to make the leap to homeownership. But some relief has arrived in the form of lower rents — which could make it easier for potential first-time buyers to save up for a home purchase.
What's happening with rents: In its September Rental Report, Realtor.com found that rental prices in the 50 largest metros dropped for the fifth consecutive month. The report attributed the decline in rents to increasing supply as multifamily construction completions saw a bump in September.
The median rent in the metros analyzed was $1,757 in September, down $29 from the peak in July 2022. Rents are still significantly higher compared to pre-pandemic levels, however.
Rent prices have been ticking down even as units are being snapped up more quickly, said Danielle Hale, chief economist at Realtor.com.
For those who are renting and aren't yet able to buy, it's an opportunity to continue saving for a down payment while waiting for affordability to improve.
Where prices are falling: Units of all sizes saw small declines in September, but two-bedroom units experienced the biggest dip. The median rent for a two-bedroom unit was $1,934 a month in September, down 0.7% year-over-year — but still 26.3% higher than in July 2019.
Regionally, the West — particularly expensive coastal areas — was home to many of the metros with big price drops. San Francisco rents fell 4.8%, while Los Angeles rents were down 3.4%. But the cities that topped the list of decliners were in the South, led by Austin (down 7.3%), Dallas (down 6.2%) and Orlando (down 5.4%).
Other metros are still seeing rents go up, however. The Midwest experienced some of the fastest year-over-year rent growth, with four cities in that region posting gains of 3% or more, led by Milwaukee at 3.9%. Of all the metros surveyed, the Louisville, Kentucky, area and Richmond, Virginia, tied for the top spot with 4.6% growth.