Rents in certain parts of the country continued to decline in June though prices are still well above pre-pandemic levels.
In June 2023, the U.S. rental market had an annual decline for the second month in a row, according to data from Realtor.com. Rent for studio to two-bed properties fell 1% within the top 50 metros.
According to Realtor.com economists, rents in the Midwest have been slowing though they are up 3.2% compared to a year ago. Meanwhile, rents in the West and South are lower, down 3.8% and 1.3%, respectively, than they were a year ago, the data showed.
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Still, Realtor.com economist Jiayi Xu said median asking rent "is still at a very high level."
Median asking rent hovered around $1,745, which is down by $31 from a peak in July 2022. However, it's still 24.1% higher than the same time in 2019, according to the data.
Tenants are more likely to stay put because there are higher costs associated with moving compared to renewing and given the widening disparity in growth rates between rental prices for new tenants and lease renewals, according to Xu.
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"This is likely to dampen the level of competition in the rental market," Xu added. Competition is also likely to be alleviated because of the fast-growing new construction of multi-family units. As a result, the rate of rent growth is projected to slow in recent months.
Even though rents are elevated, renting is still the more affordable option compared to buying in many areas due to high housing prices and elevated mortgage rates – meaning people will stay longer in the renting market.
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"In other words, the demand for rental properties is still very strong when compared to the pre-pandemic period," Xu said.
