Average rents increase again to the highest level since 2022

Despite a dip in home prices in some areas, rents continue to climb across the board, keeping the overall cost of housing—whether buying or renting—near record highs. 

According to a recent report by real estate brokerage Redfin, rents in the U.S. increased by nearly 1% in May compared to May 2023, pushing the national average rent to $1,653, the highest since October 2022.

This increase in May marked the second consecutive month of rising rents, following a 0.9% uptick in April. Although the surge in apartment construction during the pandemic initially drove rents down, millions of Americans priced out of the home-buying market have since absorbed the excess supply, driving rents back up.

On a positive note, Redfin anticipates that a new wave of apartment construction could help stabilise future rent increases, though this impact will take time to materialise. The rental vacancy rate has been steady at 6.6% for the past three quarters, the highest since 2021, though it is no longer growing as it did during the pandemic.

While the recent rise in asking rents in May suggests some stability compared to the dramatic shifts of recent years, affordability remains a concern. During the pandemic, rents soared by as much as 17.5% year-over-year, then dropped by up to 4.1% in the summer of 2023. The median asking rent in May was $1,653, just $47 below the peak of $1,700 in August 2022.

However, the trend in rising rents is not uniform across all markets. Significant rent decreases were noted in Jacksonville, San Diego, Austin, Seattle, and Phoenix—cities that were among the most expensive during the pandemic but have since become somewhat more affordable.

Conversely, Washington, D.C. saw the highest rent increase in May, with a year-over-year rise of 11.1%. Other cities experiencing double-digit rent hikes included Cincinnati, Chicago, Virginia Beach, and Minneapolis.

Redfin Senior Economist Sheharyar Bokhari noted: “Demand from young renters remains high, as many of them are opting to stay put rather than contend with an increasingly unaffordable homebuying market. But so far, rent price growth has been limited because there are enough new apartments to meet demand, even in the busiest time of year for the rental market.”