- Apartment rents declined for all bedroom counts for the first time since June 2020, Redfin said.
- Heavy construction has helped stabilize the rental market.
- But building is slowing and property managers will eventually start raising rents again, it said.
Runaway rent hikes have subsided in the US as the post-pandemic construction overload has offered a much needed supply of apartments.
According to Redfin, asking rents fell year-over-year for all apartment sizes last month, a trend last achieved in June 2020.
The real estate listings site specified that in July, median asking rents slid 0.1% for apartments zero or one bedroom, 0.3% for two-bedroom apartments, and 2.4% for apartments with three or more bedrooms.
"Rents have recently steadied — or even dropped slightly — because of the sheer number of apartments built over the past two years," Redfin senior economist Sheharyar Bokhari said in the report.
Each bedroom category is down at least $50 from the all-time highs notched in the last two years.
After the pandemic, housing construction went into overdrive as developers raced to address the country's sizable supply deficit.
A focus on building smaller apartments was especially impactful: studio rent fell 20.9% in the first quarter year over year, Redfin previously reported.
But Bokhari added that tenants can't expect the price decline to last forever:
"Construction is slowing down and prices will eventually start rising again, but now is still a good time for renters to find a deal, especially families looking for an apartment with at least three bedrooms."
Last month, Redfin reported that apartment building permits have dropped close to 30% since the pandemic. As new inventory cools, owners might start to raise rents again within a year or two, Bohkari then said.
To be sure, the decline seen in rent varies by region.
Redfin found that Florida and Texas are leading the trend, as construction in both states outpaced other regions. Austin, Texas saw rent fall 16.9% year-over-year, while Jacksonville, Florida notched a 14.3% slump.
However, some metros saw rent climb, especially those on the East Coast and Midwest. Virginia Beach, Virginia notched the sharpest appreciation, with rent rising 13.7% from a year ago.
Today, the national vacancy rate remains at its highest level since 2021, and landlords are looking for aways to address it.
According to Zillow, one-third of property managers have been offering sweeteners, such as free parking, to attract new tenants.
While rent dropped for all bedroom counts, the national median asking rent actually rose 0.4% year-to-year last month when combining each property type, Redfin said.