The real estate company Redfin analyzed asking price data on single-family homes, multi-family units, condos and townhouses from Rent.com and Redfin.com.
The company found that the rental market lost momentum over the last year and a half, in large part, because there are more apartments on the market – the result of a building boom in recent years.
In fact, the number of completed apartments in the U.S. rose 7% year over year in the third quarter to a seasonally adjusted annual rate of 1.2 million, one of the highest levels of the last three decades.
A "for rent" sign is posted in front of a home on December 12, 2023 in Miami, Florida. (Credit: Joe Raedle/Getty Images)
According to Redfin, this jump in supply has left many landlords struggling to fill vacancies, motivating them to drop asking rents in some cases.
"Renters are finally catching a break. Better deals are easier to come by because landlords are doling out concessions and rents have started falling in a meaningful way. Rising supply also means renters have more good options to choose from," Redfin Chief Economist Daryl Fairweather said in a statement. "With homeownership so expensive, renting has started to lose its stigma. Still, we may see more renters jump into the homebuying market next year as home-sale prices and mortgage rates tick down."
The company also said that some landlords are offering one-time discounts like a free month’s rent or reduced parking costs to attract renters. This means the prices renters are paying in total are likely coming down faster than they appear to be in the data.
This news comes as Americans continue to face affordability challenges driven by inflation.
While rents are dropping, they’re still 22.1% higher than they were in November 2019 before the COVID-19 pandemic housing boom and are just 4.2% below the $2,054 record high hit in August 2022, according to Redfin.
In addition, the median asking rent in the Midwest rose 4.6% year over year to $1,434 – the only increase among the four major U.S. regions.
"Rents are climbing in the most affordable region and falling fastest in one of the least affordable, which makes sense at a time when housing affordability is so strained. Research shows that a near-record share of house hunters are leaving their metro when they move, many in search of a more affordable place to live," Redfin wrote.
This story was reported from Los Angeles.