Median rent in the U.S. rose for the third consecutive month in March, up 0.8 percent from a year ago to $1,987, according to a new report from real estate company Redfin.
While rents had decreased nationally during the preceding three-month period, rental prices have started to tick up again, as has inflation.
Redfin pointed to high mortgage rates — driven by high borrowing costs set by a committee of Federal Reserve officials — as a contributing factor. More people are putting off buying a home and opting to rent, driving up demand for rental units.
Changes in rental price varied significantly by region. Rent in the Midwest spiked more than any other region last month, up 5.3 percent from last year at a record $1,456. The Northeast saw the second-biggest increase, up 3.8 percent from last year at $2,504. The median rent in the South rose just 0.3 percent from last year, and fell 0.7 percent in the West.
Redfin attributed the uneven regional rent price changes to more housing being built in the South and the West, which means there is more competition between landlords to fill vacancies. Renters in the Midwest and Northeast are competing for fewer vacancies, making it easier for landlords to raise rent.
The Midwest remains the most affordable region to live in, according to Redfin, and rent prices nationally aren’t growing as fast as they did during the pandemic.
In 2022, rents jumped by as much as 17.7 percent year-over-year, but dropped below 3 percent in 2023 as more apartments hit the market.
“During the pandemic, you saw property owners charging $2,800 a month in rent for a house that a year earlier cost $2,000,” said Heather Mahmood-Corley, a Redfin real estate agent in Phoenix. “But the economy has changed, and many people are trying to curb their spending, which means it’s harder for property owners to get renters to agree to big rent hikes.”
There are also a near-record number of apartments under construction, according to Redfin, meaning housing supply is expected to increase significantly, which will help keep rates from rising rapidly in the future.