Rents were falling, then they were flatlining, and now they’re reheating. The typical rent last month was $2,054, an increase of 3.5% from a year earlier, which happens to be the fastest annual pace since July last year, according to Zillow.
“The months long slowdown in the rental market appears to be leveling off as the busy summer season kicks off,” Zillow said in its monthly rental report published this week. “Rents are growing at their fastest annual pace in nearly a year—though the margins are slim—and concessions offered by landlords and property managers have flattened after reaching a three-year high this spring.”
On a monthly basis, rents rose 0.5% in June, which is pretty normal. But as Zillow said, concessions are down slightly, and it could mean landlords are more confident than they were a couple of months ago. Still, “a portion of this rental market reheating is likely because of seasonal factors,” Zillow said, since renters sometimes move during the summer because of school schedules and leases ending.
Separately, Redfin said the median apartment asking rent rose 0.7% in June from a year earlier to $1,654—calling it “the biggest gain in over a year.”
It’s a change for the rental world. Toward the end of last year, Redfin found asking rents experienced their greatest decline in more than three years, “the result of a building boom in recent years,” it said at the time. But then, at the beginning of this year, Redfin found asking rents had flatlined, suggesting rents were “leveling off after surging during the pandemic and then rapidly slowing,” the analysis read, again pointing to a building boom that’s led to apartment vacancies for landlords.
But let’s be clear: Rents are still high. According to Zillow, rents have increased by 32.8% since the pandemic. Already half of all renter households, or 22.4 million renters, were considered cost-burdened, meaning they spent more than 30% of their income on housing costs; and the number of severely cost-burdened renter households reached an all-time high of 12.1 million, as of 2022, according to a recent report from Harvard University’s Joint Center for Housing Studies.
Rents are up on an annual basis in 48 of 50 major metropolitan areas, but in some places they’re increasing much more significantly than in others. For instance, in Hartford, rents are 7.8% higher than a year ago; in Cleveland, they’re 7.2% higher, per Zillow. But a separate analysis from Redfin published earlier this week found asking rents fell dramatically in Jacksonville last month, a 12% year-over-year decline. Asking rents also fell in Tampa, Orlando, Miami, and Austin.
There’s some variation between single-family rents and multifamily rents, too. The latter saw rents increase 2.7% from the year before and 26.7% from the start of the pandemic. Single-family rents, on the other hand, are 4.7% higher than last year and 39.6% higher than before the pandemic began.
And of course, there’s always cities that are more affordable than others. It’s the usual suspects: Minneapolis, Salt Lake City, and St. Louis, where people spend roughly 20% of their median income on typical rent. Then there’s Miami, New York, and Los Angeles, where people typically spend roughly 40% of their income on rent.
Here’s the thing: We just got our best inflation report in more than three years, but if rents are on the rise again, it’s not clear what that’ll mean for inflation in the coming months, as housing is a substantial component. On the back of the consumer price index release, Lisa Sturtevant, chief economist at Bright MLS, said in a statement: “The shelter component of the Consumer Price Index is still running relatively hot, with shelter inflation at 5.2% in June. However, shelter enters the CPI calculation with a lag.”
