Is Relief On the Way for Renters?

Renters may finally be getting some relief.

After months of consecutive price growth in rent prices, prices have dropped for the third month in a row, according to Realtor.com®. October was also the ninth month of declining growth in prices, rising just 4.7% year over year, compared to double-digit growth in January, when rent prices hit a peak growth of 17.4% year over year. The median asking rent across the country was $1,734, a decrease of $25 from September and down $47 from the start of the year.

Despite dropping prices, renters already locked into a lease said they are not benefiting from more affordable prices. Nearly 75% of renters who have moved in the last year had a rent increase, and 63.2% of renters who have resided in their current place between 12 and 24 months have also reported a rent increase, up from 52.5% in July. Renters who renewed a lease had a increase of $138 per month, compared to $160 in July. Around 35% of renters reported trying to lower their rent with their landlord, but only 17.3% were successful, representing just 6% of all renters. With more frugal options potentially available, 69.5% of renters who have had a rent increase said they may move to something more affordable, an increase of 3.3% from July. Renters reported they are looking for something about $200 a month (or 12.5%) less expensive than their current monthly payment. Despite renters’ protests, 70.4% of landlords reported they plan to raise rents on one or more of their rental properties over the next year.

Rents for studio apartments saw the biggest jump year over year, rising 6.7%, while one-bedrooms rose 4.5% and two-bedrooms rose 3.7%, representing a 4.7% overall growth. Over the past three years, two-bedrooms have risen the most, at 24.7% followed by one-bedrooms at 23.2% and studios at 18.3%, representing 23.5% overall growth.

The rising rental prices have had an impact on potential homebuyers with less than one-third of renters (32.3%) planning to pursue homeownership in the coming year, down from 34.6% in July. Nearly 84% indicated that inflation and rising interest rates impacted their plans—up from a reported 80.8% in July 2022.

Sixty-seven percent of renters who said their plans have been impacted by rising interest rates and inflation are considering delaying the purchase of a home and continuing to rent instead. And they’re not able to save for a down payment due to the higher rents and this may continue to cause renters to reassess their plans to purchase a home.