Redfin Reports Asking Rents Fall 0.7% to Lowest Level Since March 2022

Rhea-AI Summary

Redfin (RDFN) reports that U.S. median asking rents dropped 0.7% year-over-year to $1,595 in November, marking the lowest level since March 2022. The figure represents a 6.2% decrease from the August 2022 peak of $1,700. The price per square foot fell 2.2% to $1.79, dropping below $1.80 for the first time since November 2021.

The decline is attributed to a record number of new apartment completions, with national apartment completions rising 22.6% year-over-year. Austin, TX experienced the largest rent decrease (-12.4%), while Cleveland saw the biggest increase (10.6%). The vacancy rate for buildings with five or more units reached 8% in Q3, the highest since early 2021.

Positive

• Record increase in apartment completions (+22.6% YoY)
• Improved rental affordability with median rents down 6.2% from peak
• Increased vacancy rate to 8%, offering more choices for renters

Negative

• Median asking rents declined 0.7% YoY to $1,595
• Price per square foot dropped 2.2% YoY to $1.79
• Significant rent decreases in key markets (Austin -12.4%, Tampa -11.3%)

Insights

Market Research Analyst

The rental market shows clear signs of cooling, with the median U.S. asking rent falling 0.7% YoY to $1,595. This represents a significant 6.2% decline from the August 2022 peak of $1,700. The trend is particularly pronounced in Sun Belt markets, with Austin experiencing a dramatic 12.4% decrease. The cooling is primarily driven by a surge in new apartment supply, with completions up 22.6% YoY, pushing vacancy rates to 8%.

The market dynamics vary significantly by region, with Midwest and East Coast metros showing strength due to new construction. The price per square foot metric hitting below $1.80 for the first time since November 2021 indicates a broader market correction, suggesting improved affordability for renters but potential pressure on real estate companies' revenue streams.

Financial Analyst

For Redfin (RDFN) and other real estate companies, the declining rental rates present a challenging revenue environment. The combination of falling rents and increasing vacancy rates could impact property management revenues and overall market transaction volumes. The divergence between markets creates opportunities for strategic portfolio reallocation, but the general downward trend in rental rates, particularly in high-growth Sun Belt markets, signals potential pressure on profitability.

The data suggests a market correction rather than a collapse, with some markets like Cleveland and Louisville showing robust growth. However, the sustained decline in price per square foot across all bedroom types indicates a broader market softening that could extend into 2024, potentially affecting RDFN's revenue streams from rental-related services.

Cleveland recorded the biggest rent increase, while Austin, TX posted the biggest decrease

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The median U.S. asking rent fell 0.7% year over year in November to $1,595, the lowest level since March 2022. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Rents were down 1.1% on a month-over-month basis.

The median rent is now 6.2% lower than when it hit an all-time high of $1,700 in August 2022.

Highlighting improved rental affordability, November marked the 19th consecutive month where the median asking rent price per square foot (PPSF) fell year over year, down 2.2% to $1.79. That’s the first time the median PPSF has been below $1.80 since November 2021.

While the rental market has remained essentially flat over the past two years, rents have started to tick down slightly in recent months, thanks in part to the record number of new apartments that have been completed this year.

Nationally, apartment completions rose 22.6% year over year to the highest level in over 12 years in the second quarter. As a result, the vacancy rate for buildings with five or more units rose to 8% in the third quarter, the highest level since early 2021.

“Renters in areas where construction has boomed are in a sweet spot right now. Affordability is improving as rents fall and wages rise, and there is increased choice with more and more new apartment buildings opening,” said Redfin Senior Economist Sheharyar Bokhari. “As construction starts to slow, rents will eventually tick back up, but 2025 is shaping up as a renter’s market with potential for the affordability gap between buying and renting to widen.”

Rents for 0-1 bedroom apartments fall to three-year low

With a major boost in supply, November marked the fifth consecutive month that asking rents fell across all bedroom counts.

Median asking rents for 0-1 bedroom apartments fell 1.7% year over year to $1,450 a month, the lowest level since November 2021. Rents for 2 bedroom apartments fell 1.1% (to $1,671) and 3+ bedroom apartments fell 2.3% (to $1,955).

	Median Asking Rent (Nov)	Median Asking Rent YoY Change	Price Per Square Foot YoY Change
0-1 Bedroom Apartments	$1,450	-1.7%	-2.5%
2 Bedroom Apartments	$1,671	-1.1%	-1.2%
3+ Bedroom Apartments	$1,955	-2.3%	-2.4%

On a price per square foot basis, the decline was more apparent, with 0-1 bedroom apartments falling the most (-2.5%), followed by 3+ bedroom apartments (-2.4%) and 2 bedroom apartments (-1.2%).

Austin rents drop 12%, leading a number of Sun Belt metros seeing significant declines

As has been the case for most of 2024, of the 44 major metros Redfin analyzes, Sun Belt metros saw the most significant declines in median rents, led by Austin, TX (-12.4%), Tampa, FL (-11.3%), Raleigh, NC (-8.4%), Jacksonville, FL (-7.5%) and Nashville, TN (-7%).

Major Metros With Highest Rent Decreases

	Median Asking Rent (Nov)	Median Asking Rent YoY Change	Price Per Square Foot YoY Change
Austin, TX	$1,445	-12.4%	-15.7%
Tampa, FL	$1,740	-11.3%	-5.0%
Raleigh, NC	$1,424	-8.4%	-7.8%
Jacksonville, FL	$1,475	-7.5%	-5.2%
Nashville, TN	$1,506	-7.0%	-9.9%
Denver, CO	$1,710	-5.7%	-4.7%
Seattle, WA	$1,995	-4.5%	-5.4%
New York, NY	$2,798	-4.2%	-5.8%
Orlando, FL	$1,703	-4.1%	-5.4%
Pittsburgh, PA	$1,390	-3.5%	2.9%

Rents rose the most in Midwest and East Coast metros, where there has been less new construction compared to the Sun Belt.

Cleveland posted the biggest increase (10.6%), followed by Louisville, KY (10.2%), Baltimore (9.4%), Washington D.C. (9.4%) and Providence, RI (9.3%).

Major Metros With Highest Rent Increases

	Median Asking Rent (Nov)	Median Asking Rent YoY Change	Price Per Square Foot YoY Change
Cleveland, OH	$1,360	10.6%	9.0%
Louisville, KY	$1,236	10.2%	12.2%
Baltimore, MD	$1,597	9.4%	5.0%
Washington, DC	$2,044	9.4%	10.8%
Providence, RI	$2,120	9.3%	7.6%
Buffalo, NY	$1,315	6.9%	2.6%
Detroit, MI	$1,395	6.8%	7.8%
Virginia Beach, VA	$1,600	6.8%	6.6%
Chicago, IL	$1,736	6.5%	-0.5%
Memphis, TN	$1,222	6.3%	2.8%

To view the full report, including charts, methodology and additional metro-level insights, please visit: https://www.redfin.com/news/rental-tracker-november-2024

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, and title insurance services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve approximately 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241211103450/en/

Contact Redfin

Redfin Journalist Services:

Kenneth Applewhaite

press@redfin.com

Source: Redfin

FAQ

What is the current median asking rent according to Redfin (RDFN) in November 2023?

The median U.S. asking rent was $1,595 in November 2023, representing a 0.7% year-over-year decrease.

How much have RDFN reported rents dropped from their peak in August 2022?

Rents have dropped 6.2% from the peak of $1,700 in August 2022.

Which city reported the largest rent decrease according to RDFN's November report?

Austin, TX reported the largest rent decrease at -12.4% year-over-year.

What is the current apartment vacancy rate according to Redfin's report?

The vacancy rate for buildings with five or more units rose to 8% in the third quarter, the highest level since early 2021.

How much did apartment completions increase according to RDFN's latest data?

National apartment completions rose 22.6% year-over-year to the highest level in over 12 years in the second quarter.