(Bloomberg)—Rents in the US increased at the slowest pace in more than a year as tenant budgets were stretched to new limits, according to a new report from Realtor.com.
Rents rose 7.8% in September to a median $1,759, slowing from double-digit increases seen for more than a year, the data show. Median US rents peaked in July and are still up nearly 25% since before the pandemic.
“Wages haven’t kept up with that,” said Ryan Coon, Realtor.com’s vice president of rentals. “Renters are really feeling squeezed.”
Rents have been a big driver of US inflation, which the Federal Reserve has sought to contain by jacking up interest rates. Higher borrowing costs — as well as increased labor and construction prices — have cut into landlord profits, but they’re also putting pressure on rent increases as some tenants reach the limits of their ability to pay.
“Affordability is what we’re watching most in 2023,” Coon said during a presentation at the National Association of Real Estate Editors conference in Atlanta.
More new apartments and a small number of single-family rentals are coming to market and adding to supply, Coon said. But demand may still remain high as a growing share of renters can’t afford to own because of high housing prices and rising interest rates. The monthly cost of a starter home is $561 more than renting, up from $78 in January.
“Renters are staying put,” Coon said. “They’re less mobile.”
To contact the author of this story: John Gittelsohn in Los Angeles at [email protected].
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