Rent growth is likely to keep slowing as rising interest rates continue to cool the economy
(NASDAQ: RDFN) —U.S. asking rents climbed to a record high in August, but rent growth moderated for the third-straight month. The national median asking rent was up 11% year over year to $2,039, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the smallest annual increase in a year, down from a peak gain of 19% in March. On a month-over-month basis, the median asking rent climbed 0.4%, the slowest growth since December 2021 and down from a 1.6% increase a year earlier.
“Rent growth will likely slow further as the Federal Reserve continues to raise interest rates. Higher interest rates impact the rental market because they put a damper on spending power in the economy as a whole, including renters’ budgets,” said Redfin Deputy Chief Economist Taylor Marr. ”Growth in rents is also likely to be slowed by a boost in rental supply. There are nearly a million rental units under construction that will hit the market in the coming months and years.”
Rental Market Summary
Median Monthly Rent
Rents Rose More Than 20% in Cincinnati, Pittsburgh, Indianapolis and Nashville
In Cincinnati, asking rents rose 26% year over year in August, the largest jump among the 50 most populous U.S. metropolitan areas. Pittsburgh, Indianapolis and Nashville also saw increases of at least 20%. This was the first month since August 2021 that no metro area saw rents increase 30% or more from a year earlier.
Top 10 Metro Areas With Fastest-Rising Rents Year Over Year
- Cincinnati, OH (26%)
- Pittsburgh, PA (22%)
- Indianapolis, IN (21%)
- Nashville, TN (20%)
- Portland, OR (19%)
- New York, NY (18%)
- Newark, NJ (18%)
- Nassau County, NY (18%)
- New Brunswick, NJ (18%)
- San Antonio, TX (17%)
Four of the 50 most populous metro areas saw rents fall in August from a year earlier, up from three in July. Rents declined 15% in Milwaukee, 7% in Minneapolis, 2% in Jacksonville, FL and 1% in Baltimore. Milwaukee and Minneapolis have seen declining asking rents since April.
Metro Areas Where Rents Declined Year Over Year
To view the full report, including charts and methodology, please visit:
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