According to data from Redfin, rent prices in the US came close to reaching a new record last month. The median asking rent price rose to $2,052, just $3 away from the all-time-high recorded in August of last year. This indicates that the rental market is still hot, similar to the buyers' market where competition for limited available units is high.
Interestingly, the median rent price is not significantly cheaper than the median mortgage payment for a single-family home, which was $2,161 in July according to the Mortgage Bankers Association. This suggests that renting is becoming increasingly expensive compared to homeownership.
To attract more tenants, landlords are now offering concessions such as a one to three month period of free rent. This practice was relatively uncommon until the rental market started heating up over the past year. Jon Ziglar, the CEO of Redfin's rental subsidiary, attributes the competition for more affordable units to limited new supply and pressure on consumer wallets.
However, annualized rent increases have cooled down significantly compared to last year. In August, rents slipped 0.1% year-over-year, a significant decrease from the 12.3% increase recorded in August 2022.
There are also signs that rent prices are cooling in some regions of the US, and Redfin economists believe this trend could continue. More homeowners are choosing to rent out their properties instead of selling, as they wait for mortgage rates to ease. This increase in rental supply may help alleviate the pressure on rent prices in these regions.
Overall, the US rental market remains highly competitive, with rent prices approaching record levels. While there are indications of cooling in some areas and concessions being offered by landlords, the overall trend suggests that renting is becoming less affordable compared to homeownership.