Rents fall annually for the first time in 3 years

Rents fell annually for the first time in three years last month, reaching the lowest median asking rent in more than a year, according to data released Friday by real estate brokerage Redfin. 

Median asking rents dropped 0.4 percent year over year to $1,937 in March — marking the first annual decline since the beginning of the pandemic in 2020. The median asking rent rose more than 17 percent between 2021 and 2022.

Redfin analyzed rent prices from Rent., an apartment rental listing website, across the 50 largest U.S. metros, using data from more than 20,000 apartment buildings nationwide. 

Redfin’s report attributes the annual decline to a boom multi-family housing construction, with the number of units completed hitting a three-decade high.  

Austin, Texas, once a red-hot market during the pandemic, saw the largest annual decline in median asking rents at 11.2 percent. And in Chicago, asking prices dropped by more than 9 percent. 

Yet, rents shot up in several metros with four, including Cleveland and Raleigh, N.C., seeing double-digit increases. Asking prices rose by 16.6 percent in Raleigh and by 15.3 percent in Cleveland. 

Rents have soared in recent years due partly to persistently high prices in the larger housing market and volatile mortgage rates keeping would-be buyers on the sidelines.

Mortgage rates decreased for the fifth straight week, according to new data from Freddie Mac. The average 30-year fixed mortgage rated decreased to 6.27 percent.

The Federal Reserve’s ongoing interest rate hikes to battle growing inflation have consistently pushed up mortgage rates, but new data shows that inflation is cooling. 

The consumer price index released by the Labor Department on Wednesday fell to a 5 percent annual increase in March from 6 percent in February. This is down from 9.1 percent at its peak in June.   

“Incoming data suggest inflation remains well above the desired level but showing signs of deceleration, Freddie Mac Chief Economist Sam Khater said in a press release. 

“These trends, coupled with tight labor markets, are creating increased optimism among prospective homebuyers as the housing market hits its peak in the spring and summer.”