US Asking Rents Crept Higher for Second Consecutive Month in May

On Tuesday, Redfin reported that the median US asking rent rose 0.8% year-over-year to $1,653 in May, the highest level since October 2022. The increase marks the second consecutive monthly increase (+0.9% in April) following 11 months of declines. Month-over-month, rents rose 0.5%.

Apartment prices are closely tied to apartment supply, Redfin explained. Multifamily construction surged during the pandemic moving frenzy, which pushed rent prices down because building owners were competing for tenants. While multifamily building starts have fallen below their 10-year historical average, there is still a backlog of new units that are hitting the market every month, which is putting a lid on how much prices can grow.

In remarks accompanying the report, Redfin Senior Economist Sheharyar Bokhari said:

“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.”