For the first time in nearly three years, the average amount paid for home rental in the United States has fallen, and this may prove a boon for those seeking a home to rent.
As of May 2023, the national median amount for rent dropped to around $1,739, 0.5% lower than it was at the same time in 2022. According to monitors at Realtor.com, this is the first time that rental rates have fallen since they began monitoring the rental market in early 2020.
But while the average rent charged on residential property has decreased since it peaked at $1,777 in July of last year, it has yet to return to pre-pandemic levels.
Charting the Country
Western and southern states dropped 3% and 0.7%, respectively, in May. Meanwhile, rents remain high in the midwestern and northeastern regions of the country – and levels are still rising.
In the case of the midwest, rents remain high as city living in its states has stayed affordable, and unemployment remains low. On the other hand, a stronger job market in the northeast signifies a greater demand for residential rentals.
Mostly Good News
For Realtor.com chief economist Danielle Hale, this recent drop in rental rates may be construed as a sign that rent-driven inflation is drawing to an end though it may take until next year actually to see it in anything official.
Nevertheless, this development is good news for home hunters throughout the country, particularly when taken into context with decreased inflation and an improved job market.
Also, it is possible that rental rates may go even lower throughout the second half of this year and well into the beginning of 2024. A possible increase in the number of rentals in the market in the coming months may help drive rates down.
But Hale also warns that while the rental market is improving, there could be some shocks along the way for those who stayed put throughout the pandemic. As she explains, rents are still around 25% higher than in 2019, the year before the pandemic hit.