Realtor.com® October Rental Report: Rents Fall Again, With More New Units Expected in 2025

Rhea-AI Summary

Realtor.com's October Rental Report shows rents declined -0.8% to $1,720, marking the fifteenth consecutive month of year-over-year decreases. The rental market is experiencing downward pressure due to increased supply, with multifamily completions reaching 606,000 units between January and September 2024. Rental housing stock is projected to grow by 1.1% to over 49 million units by fall 2025, with the South seeing the largest expected increase at 1.5%. All unit sizes saw rent declines in October, with studios experiencing the biggest drop at -1.2%, followed by one-bedrooms at -0.9% and two-bedrooms at -0.7%.

Positive

• Rental housing stock expected to increase by 1.1% to over 49 million units by fall 2025
• Multifamily completions reached 606,000 units in Jan-Sep 2024, up from 445,000 in 2023
• South region showing strong growth with 49.1% year-over-year gain in new multifamily completions

Negative

• Overall rents declined -0.8% to $1,720 in October
• Fifteen consecutive months of year-over-year rent declines
• All unit sizes experiencing rent decreases, with studios dropping the most at -1.2%

Insights

Real Estate Market Analyst

The rental market is experiencing significant structural changes with important implications for real estate investors and REITs. The -0.8% decline in median rents to $1,720 marks the fifteenth consecutive month of year-over-year decreases, driven by substantial new supply hitting the market. The projected 1.1% increase in rental stock to over 49 million units by fall 2025 suggests continued downward pressure on rental rates.

The regional disparity is noteworthy - the South leads with a projected 1.5% stock increase, while major markets like Denver and Phoenix show substantial rent declines of -5.6% and -4.5% respectively. This supply-driven softening particularly affects high-growth markets that saw significant construction starts during 2022-2023. Despite recent declines, rents remain 18.8% above 2019 levels, providing a buffer for property owners while offering tenants some relief from peak rates.

Economic Analyst

This data reveals important economic trends beyond just the rental market. The surge in multifamily completions, reaching 606,000 units annually compared to the pre-pandemic average of 359,000, reflects the market's response to previous housing shortages and high rents. The regional variations in supply growth - 49.1% in the South versus just 7.4% in the Northeast - highlight the ongoing demographic shift toward Sun Belt states.

The sustained rental decline suggests a potential shift in inflation dynamics, as housing costs are a significant component of CPI. However, with rents still well above pre-pandemic levels and new construction moderating, this appears more like a market normalization than a concerning downturn.

Growing supply of multifamily housing suggests a 1.1% increase in rental stock to more than 49 million units by next fall, with the biggest increases in the South and West.

SANTA CLARA, Calif., Nov. 22, 2024 /PRNewswire/ -- Rents fell by -0.8% to $1,720 in October, marking their fifteenth consecutive month of year-over-year declines and falling the most for smaller-sized units, according to the Realtor.com^® October Rental Report released today. Looking ahead, new rental properties coming onto the market are expected to put continued downward pressure on rents next year.

"New multifamily construction projects started in the last two years have hit the market in 2024, with a greater supply of units helping to soften rents and bring renters some relief," said Danielle Hale, chief economist at Realtor.com^®. "While we expect fewer multifamily homes to be finished in 2025, we still anticipate enough to increase supply, which will keep downward pressure on rents." 

Growing rental supply remains key for 2024 and 2025 rental market
More completed multi-family homes made their way to the market in 2024 as projects begun in 2022 and 2023 were finished. Between January and September 2024, the average seasonally adjusted annual rate of multi-family completions reached 606,000 units, up from 445,000 units in the same period in 2023, and higher than the 2017-19 pre-pandemic average of 359,000 units. While a lower rate of completions is anticipated for next year, rental housing stock is still expected to rise by 1.1% to more than 49 million units by fall 2025, which would be 6.7% higher than in the fall of 2019, before the pandemic.

Rental stock is expected to increase most in the South by fall 2025
New multifamily completions rose in all regions of the country this year, with the biggest year-over-year gains seen in the South (49.1%) followed by the Midwest (44.9%), West (23.9%) and Northeast (7.4%). That has translated to lower median asking rents. In the South, the biggest annual drops in median asking rent in October were seen in Memphis, Tenn. (-5.4%), and Nashville, Tenn. (-5.2%). In the Midwest, the biggest annual decline was in Chicago (-4.1%) and in the West, rent declines were led by Denver (-5.6%) and Phoenix (-4.5%). Large Northeastern metro areas, such as New York (0.4%), have seen small increases in rent due to relatively slower increases in the supply of new rental homes.

By fall 2025 rental stock is estimated to increase most in the South, with a 1.5% year-over-year increase, followed by the West (1.2%), Midwest (0.9%) and Northeast (0.7%). That will translate to increases in the overall rental stock by 8.9% in the South, 8.6% in the West, 5.0% in the Northeast and 1.7% in the Midwest compared to pre-pandemic levels.

Rents decline across all unit sizes
October saw the fifteenth straight month of year-over-year rent declines for 0-2 bedroom properties. The median asking rent fell by $14, or -0.8%, to $1,720. That's still just $40 (-2.3%) lower than its August 2022 peak, and is $272 (18.8%) higher than the same time period in 2019.

All unit sizes saw rent declines in October, with the biggest drops in smaller-sized units. The median rent for studios fell -1.2% year-over-year, to $1,436. That's down -3.6% from its October 2022 peak but is 12.5% higher than five years ago. The median rent for one-bedroom units fell -0.9% to $1,600, 17.1% higher than five years ago. And the median rent for two-bedroom units fell -0.7% to $1,908, which is 21.1% higher than five years ago.

National Rental Data – October 2024

Unit Size	Median Rent	Rent YoY	Rent Change – 5 years
Overall	$1,720	-0.8 %	18.8 %
Studio	$1,436	-1.2 %	12.5 %
1-bed	$1,600	-0.9 %	17.1 %
2-bed	$1,908	-0.7 %	21.1 %

50 Largest Metropolitan Areas – October 2024

Metro	Median rent (0-2 bedrooms)	YOY (0-2 bedrooms)
Atlanta-Sandy Springs-Alpharetta, GA	$1,583	-3.4 %
Austin-Round Rock-Georgetown, TX	$1,495	-4.2 %
Baltimore-Columbia-Towson, MD	$1,827	0.1 %
Birmingham-Hoover, AL	$1,253	-2.3 %
Boston-Cambridge-Newton, MA-NH	$2,944	-1.7 %
Buffalo-Cheektowaga, NY	NA	NA
Charlotte-Concord-Gastonia, NC-SC	$1,520	-3.8 %
Chicago-Naperville-Elgin, IL-IN-WI	$1,780	-4.1 %
Cincinnati, OH-KY-IN	$1,397	4.2 %
Cleveland-Elyria, OH	$1,222	0.0 %
Columbus, OH	$1,210	1.1 %
Dallas-Fort Worth-Arlington, TX	$1,462	-4.3 %
Denver-Aurora-Lakewood, CO	$1,836	-5.6 %
Detroit-Warren-Dearborn, MI	$1,319	-0.8 %
Hartford-East Hartford-Middletown, CT	NA	NA
Houston-The Woodlands-Sugar Land, TX	$1,375	-1.0 %
Indianapolis-Carmel-Anderson, IN	$1,306	-0.1 %
Jacksonville, FL	$1,549	0.1 %
Kansas City, MO-KS	$1,348	0.4 %
Las Vegas-Henderson-Paradise, NV	$1,486	-1.2 %
Los Angeles-Long Beach-Anaheim, CA	$2,848	-0.3 %
Louisville/Jefferson County, KY-IN	$1,249	0.2 %
Memphis, TN-MS-AR	$1,204	-5.4 %
Miami-Fort Lauderdale-Pompano Beach, FL	$2,365	-1.3 %
Milwaukee-Waukesha, WI	$1,641	1.6 %
Minneapolis-St. Paul-Bloomington, MN-WI	$1,539	1.1 %
Nashville-Davidson--Murfreesboro--Franklin, TN	$1,556	-5.2 %
New Orleans-Metairie, LA	NA	NA
New York-Newark-Jersey City, NY-NJ-PA	$2,881	0.4 %
Oklahoma City, OK	$1,021	0.7 %
Orlando-Kissimmee-Sanford, FL	$1,690	-1.2 %
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	$1,784	-0.2 %
Phoenix-Mesa-Chandler, AZ	$1,512	-4.5 %
Pittsburgh, PA	$1,462	-0.2 %
Portland-Vancouver-Hillsboro, OR-WA	$1,720	3.4 %
Providence-Warwick, RI-MA	NA	NA
Raleigh-Cary, NC	$1,527	-1.5 %
Richmond, VA	$1,486	-1.5 %
Riverside-San Bernardino-Ontario, CA	$2,105	-2.6 %
Rochester, NY	NA	NA
Sacramento-Roseville-Folsom, CA	$1,932	2.5 %
San Antonio-New Braunfels, TX	$1,250	-4.1 %
San Diego-Chula Vista-Carlsbad, CA	$2,764	-3.8 %
San Francisco-Oakland-Berkeley, CA	$2,766	-2.5 %
San Jose-Sunnyvale-Santa Clara, CA	$3,333	2.5 %
Seattle-Tacoma-Bellevue, WA	$1,998	-1.8 %
St. Louis, MO-IL	$1,335	1.4 %
Tampa-St. Petersburg-Clearwater, FL	$1,709	-2.0 %
Virginia Beach-Norfolk-Newport News, VA-NC	$1,524	0.6 %
Washington-Arlington-Alexandria, DC-VA-MD-WV	$2,271	2.2 %

Methodology
Rental data as of October 2024 for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com^®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.

About Realtor.com^®
Realtor.com^® is an open real estate marketplace built for everyone. Realtor.com^® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com^® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com^® is a trusted partner for business growth, offering consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com^®.

Media Contact: Mallory Micetich, press@realtor.com

View original content:https://www.prnewswire.com/news-releases/realtorcom-october-rental-report-rents-fall-again-with-more-new-units-expected-in-2025-302313765.html

SOURCE Realtor.com

FAQ

What was the median rent decrease in October 2024 according to Realtor.com?

According to Realtor.com, the median asking rent decreased by -0.8% to $1,720 in October 2024.

How many consecutive months have rents been declining year-over-year?

Rents have been declining for fifteen consecutive months year-over-year as of October 2024.

What is the projected rental housing stock increase by fall 2025?

Rental housing stock is projected to increase by 1.1% to more than 49 million units by fall 2025.

Which region is expected to see the largest rental stock increase by fall 2025?

The South region is expected to see the largest rental stock increase of 1.5% by fall 2025.