ApartmentAdvisor National Rent Report

This month’s report focuses on three key findings:

1. Rents continue to drop nationally. Rents dropped 5% year-over-year in November, reversing the post-pandemic rent hikes of last year. These decreases have made the market more favorable to renting than buying.
2. Most cities have lower rents than last year, but seven cities, primarily located in the Midwest, have faced year-over-year rent hikes of over 10%.
3. At the state level, renters in the Midwest and Northeast tended to have smaller rent decreases than the rest of the country.

The big national picture: The rental market continues to cool down from the post-pandemic rent surges in 2022.

Nationally, rent continues to cool in the US. The price of a median one-bedroom apartment dropped 1.7% from October to November, and the post-pandemic surge in rent from the summer of 2022 has fully dissipated.

November was the fifth month in a row to see a year-over-year decrease in rent. Compared to November 2022, rent is 5.1% lower. When adjusted for inflation, national median rent for a one-bedroom apartment is 8.1% lower than it was one year ago. This significant decrease is an indication that incomes have risen more than rent, and renters can overall pay less for an apartment of the same quality than they would have one year ago.

Notably, rental costs in the fall of 2023 have cooled faster than home prices. According to data from the Federal Reserve, the median listing price for homes on sale has stayed consistent with last year, hovering around post-pandemic surge levels despite rising interest rates. Homebuyers can expect to pay 23% more for a property now than they would have in 2021, based on median listing price data. In contrast, November 2023 rent is just 1% higher than it was in November 2021.

Coupled with high interest rates on mortgages, right now is a historically difficult time to buy a home. The gap between the costs of buying and renting is higher than it has ever been.

Housing costs can be slower to fall because owners see them as investments and are unwilling to sell them for lower than what they believe they deserve. Meanwhile, rental costs are more flexible, as they are responsive to demand and the price that tenants are willing to spend on housing.

Additionally, the higher-than-normal interest rates create an incentive for current homeowners to stay in their homes, since they may have locked in lower interest rates. This can reduce the supply of housing on the market, increasing home-buying prices across the country.

The most expensive cities stayed consistent in November, with New York continuing to be an expensive outlier.

Over the past month, the most expensive cities for renters have remained consistent. New York City, NY continues to be an outlier in rent costs, with a median one-bedroom apartment costing over $1,000 more than the next most expensive city, Jersey City, NJ. The nine most expensive cities are the same as last month, with Oakland, CA replacing Charleston, SC in the tenth spot.

The most expensive cities have followed traditional rental cost cycles: rents peaking in the summer and dropping through the fall and winter. All ten of the costliest cities experienced rent decreases from October to November. Compared to last year, all experienced decreases in rent from November 2023 outside of the three most expensive cities: New York City, Jersey City, and Boston, MA.

Most cities have lower rents than last year, but a few cities buck the trend.

Widening the lens to the top 100 most populous cities, nearly 70% had year-over-year decreases in rent. However, seven cities had increases in rent from Nov 2022 to Nov 2023 by over 10%.

Of these cities, Honolulu, HI and New York have had housing crises for decades, but the other cities — the majority being in the Midwest — are experiencing more recent rental struggles.

One potential explanation could be the supply of new homes not keeping up with population increases. In Fargo, ND, population has increased 4% from 2020 to 2022. During the same time period, the vacancy rate, or percentage of apartments left unrented, dropped from 9% in 2020 to 3.1% in late 2022. Another cause could be more people choosing to rent rather than buy, as homeownership is now out of reach for the majority of Americans. With more renters on the market, rental costs could be squeezed upwards.

On the other side of the spectrum, the three cities with the greatest year-over-year decreases in rent are Cleveland, OH (-24.9%), Detroit, MI (-20%), and Buffalo, NY (-18%).