When will America's rental prices come down?

The price of housing has gotten so high, it has become a major talking point in the upcoming U.S. presidential election. Costs first shot up amid the pandemic, and since then, the upward trend has felt near-impossible to shake, particularly in certain areas of the country.

While it is true that the latest data from the Bureau of Labor Statistics, released on Sept. 1, shows that in August "shelter continued a more than 40-month increase," there is some good news too. "Growth is continuing to slow," said NerdWallet. It is a hard pill to swallow that "rent prices are now 33.6% higher than they were before the pandemic" — but renters can at least find solace in the fact that the seemingly endless swell may at last be petering out.

What are rent prices expected to do next?

There is evidence to suggest that growth in rental prices is, for the most part, finally slowing down. "The median asking rent prices for apartments in one- to three-bedroom units fell in July, the first time that’s occurred since 2020, according to Redfin, a real estate brokerage site," said CNBC. Admittedly, "rents are still high because of how much prices climbed during the pandemic," said Chen Zhao, who leads the economics team at Redfin, "but now, rent growth has flattened, which can be seen as good news for renters."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

To zoom out even further, "prices increased only about 1% in the past year, according to a Washington Post analysis of rent data from CoStar Group," a pace that is "down considerably from the steep price growth seen in 2021 and 2022," said The Washington Post.

Just how much of a cooling off you see may depend on whether you are looking at a studio, a one-bedroom or a larger unit, though the trend across the board is downward. "The median asking rent price for a studio or one-bedroom apartment fell 0.1% to $1,498 a month; two-bedroom apartments decreased 0.3% to $1,730; and units with three bedrooms or more, were down 2.4% to $2,010, per Redfin data," said CNBC.

What about notoriously expensive locations?

It really depends. Of 33 major U.S. metropolitan areas analyzed, the "following five had the biggest drops in asking rents in July compared to a year ago," said Money: Austin, Texas; Jacksonville, Fla.; San Diego; San Francisco; and Tampa, Fla.

Meanwhile, some metros are continuing to see rental price increases. "Among 50 metros, the following had the highest annual rent increases among all types of housing," said NerdWallet: Hartford, Conn.; Cleveland; Providence, R.I.; Louisville, Ky.; and Richmond, Va.

Why are rents falling?

A big part of the reason rents are finally on their way to falling is "because of the sheer number of apartments built over the past two years,” Sheharyar Bokhari, a senior economist at Redfin, said to Money.

In fact, while "new multifamily building permits are slowing down," the "number of units currently under construction is near a record high, and last year saw the most new apartments hit the market in over 30 years," said CNBC.

Additionally, the much-anticipated slowdown "comes as more new homes are finishing construction and finally hitting the market," said the Post. This may allow some people to finally gain a toehold in homeownership.

Another factor working in renters' favor as fall and winter settle in: the time of year. "Rent growth follows a seasonal pattern — prices tend to go up during the spring and summer and dip during the fall and winter," said Apartment List, and "we are likely to see continued price dips of increasing magnitude in the coming months, as property owners offer modest discounts to fill vacancies during a time of year when fewer renters are looking to move."