US Asking Rent Prices Continue to Inch Lower in October

Redfin reported on Wednesday (11-8-23) that the median US asking rent in October was $1,978. This is 3.7% below the record high of $2,054 set in August 2022 and down 0.3% from a year ago. Compared to September, the median asking rent price is 1.6% lower, which Redfin notes is typical for this time of year.

According to Redfin, the October decline marks the seventh straight month in which the median asking rent was little changed from a year earlier. The rental market has flattened out following a rollercoaster ride during the past two years, when rent growth skyrocketed during the pandemic as housing demand surged, then rapidly slowed last year as inflation and economic uncertainty intensified.

In Q3, the rental vacancy rate hit 6.6%, the highest level since 2021Q1. In comparison, the homeowner vacancy rate was 0.8%—the second lowest level in records dating back to 1956 (with the lowest rate in Q2). Rental vacancies are on the rise because renters have an increasing number of options to choose from: The number of completed apartments in the US rose 4.9% year-over-year in Q3 to a seasonally adjusted annual rate of 1.2 million, one of the highest levels of the last three decades.

On the other hand, the number of apartment buildings on which construction has started plunged 26.5% year-over-year to a seasonally adjusted annual rate of 1.2 million in Q3—the biggest drop since 2010 and the lowest level since 2020. Building starts are a leading indicator of what is happening in the housing market, whereas building completions are a lagging indicator. Redfin points out that the slowdown in apartment construction could ultimately lead to higher rent prices, noting that apartment building has slowed due to higher interest rates, sluggish rent growth, and possible overbuilding in some areas.