In October, rental prices experienced another month of decline, continuing a 15-month trend, with a notable drop of 0.8% to an average of $1,720, particularly affecting smaller-sized units. This trend, driven by an influx of completed multifamily housing projects, is expected to persist, offering potential relief for renters as new properties continue entering the market.
Rental prices decreased for the fifteenth consecutive month in October, fueled by a significant rise in multifamily housing supply. According to Danielle Hale, chief economist, recent construction has greatly contributed to lowering rent prices, bringing much-needed relief to renters.
The availability of newly completed multifamily units surged in 2024, with a 36% increase in the annual completion rate compared to 2023, outpacing pre-pandemic figures. Although a smaller number of completions is anticipated in 2025, the rental housing stock aims to grow by 1.1% by fall next year, marking a 6.7% increase since 2019.
Regional differences in rent trends were notable, with the South experiencing the largest increase in multifamily completions at 49.1%, followed by the Midwest, West, and Northeast. These completions led to substantial declines in median asking rents, prominently in cities like Memphis, Nashville, Chicago, Denver, and Phoenix.
October’s data revealed rent reductions across all unit sizes, with studios experiencing the most significant year-over-year decline of 1.2%. Though current rents remain higher than pre-pandemic levels, these declines indicate a gradual adjustment in the rental market.
The projected growth in rental stock by 2025, particularly in the South, reflects an expected 8.9% increase in the region’s rental units compared to 2019. This growth is crucial in balancing supply and demand, maintaining affordability, and stabilizing the rental market.
In summary, the continued decline in rental prices, bolstered by a growing supply of rental housing, suggests a more balanced market in the coming years. As new units gradually come online, especially in the South and West, renters may find more affordable options available, promoting stability in the rental sector.
Source: Floridarealtors
