Redfin said it expects rental growth to continue to slow, but markets with strong job growth and limited new housing construction will likely continue to experience large rent increases.
The rate of annual rent growth slowed for the second straight month this year during July, according to a report released Friday by the web-powered brokerage Redfin.
The report found that the national median asking rent was up 14 percent compared to July 2021 to $2,032 — the smallest annual increase since November 2021, down from a 15 percent annual increase in June and a 16 percent increase in May.
On a monthly basis, the median asking rent inched up 0.6 percent, the slowest growth seen since February and down significantly from the 2.1 monthly increase recorded during July 2021.
The slowing rate of growth may be a sign that landlords have pushed rents as far as they can, with tenants struggling to afford other necessities that have risen with inflation.
“Big rent hikes may finally be coming to an end as landlords adjust to waning tenant budgets that are being strained by the rising cost of groceries, gas and other regular expenses,” Redfin Chief Economist Daryl Fairweather said in a statement. ”Still, rents are increasing faster than overall inflation, which has started to ease. We expect rental growth to continue to slow, but markets with strong job growth and limited new housing construction, like New York and Seattle, will likely continue to experience large rent increases.”
The major city with the biggest annual jump in rents in July was Cincinnati, which saw rents increase 31 percent year over year, according to the report. That was down from June when rents in the midwestern city saw a 39 percent annual jump.
Following Cincinnati were Nashville, Tennessee, and Pittsburgh, Pennsylvania, which saw rents jump by 26 and 24 percent respectively.
Out of the top 50 most populated metropolitan areas in the country, only three saw rents decline annually during July. Milwaukee saw rents drop 10 percent, Minneapolis recorded an 8 percent decline and rents in Baltimore inched down 0.3 percent from July 2021 levels, according to Redfin.
The methodology: Redfin reports it analyzed rent prices from RentPath across the 50 largest U.S. metro areas, using data from more than 20,000 apartment buildings. The prices in this report reflect the current costs of new leases during each period.
“In other words, the amount shown as the median rent is not the median of what all renters are paying, but the median cost of apartments that were available for new renters during the report month,” the report reads.