Rent prices rise in the spring and summer as more people look for new rental homes, but low demand combined with new inventory keep rent prices roughly flat nationally. However, in some states, according to a May report by Rent.com, average rents are rising due to an influx of new residents. The trend is clear: People are moving to areas with stronger economies that still have affordable rent and housing prices. In the states where rents are rising the fastest year-on-year, the average rent is still relatively low compared to the national average.
Nationally, rents rose just 0.29% year-on-year in April. The month-on-month decrease from March to April was -0.23% after an increase of 1.77% from February’s low. The national median rent now sits at $1,967. The monthly decline has slowed, but that may be due to weather – there’s no telling whether the national average rents have come down. However, in about 79% of the markets, rents are still rising year-on-year. And rents are rising by double digits in some Southern and Midwestern states.
States with highest annual rent increase
| State | year-on-year rent increase | Month-to-Month Rent Variations | average fare |
| South Dakota | +28.59% | +2.9% | $1,203 |
| Mississippi | +24.69% | +1.48% | $1,185 |
| Iowa | +16.76% | +2.35% | $1,126 |
| Arkansas | +14.47% | -0.62% | $1,018 |
| new Hampshire | +14.28% | -2.03% | $1,896 |
| North Dakota | +12.42% | -1.31% | $1,058 |
| nebraska | +12.00% | +1.25% | $1,327 |
| Michigan | +9.72% | +0.99% | $1,369 |
| North Carolina | +9.38% | +0.22% | $1,658 |
| Indiana | +9.24% | +0.06% | $1,267 |
In all 10 states where rent prices are rising the fastest, the average rent is below the national average. Most of the states are in the South and Midwest, except for New Hampshire. South Dakota leads the pack with nearly 29% year-over-year growth and 2.9% month-over-month growth. Housing costs and property taxes are rising more quickly than elsewhere in the state, as cities like Sioux Falls attract new residents.
States with biggest year-on-year reduction in rental prices
Only nine states saw a year-on-year decrease in rents in their cities. In many Mountain West states, rents are coming down after years of an early pandemic migration boom. For example, both Phoenix and Austin were post-pandemic boomtowns and rents are now falling in those cities, which may be trending downward for their respective states.
| State | Year-on-year rent reduction | Month-to-Month Rent Variations | average fare |
| Idaho | -5.37% | -0.95% | $1,635 |
| Nevada | -4.78% | -0.10% | $1,568 |
| Arizona | -4.29% | -1.95% | $1,459 |
| washington | -4.15% | +1.74% | $2,331 |
| Illinois | -2.21% | +1.81% | $1,835 |
| Texas | -1.75% | -0.9% | $1,446 |
| Kansas | -1.58% | +0.18% | $1,110 |
| Maryland | -0.67% | +0.36% | $1,883 |
| Oregon | -0.11% | -1.99% | $1,766 |
Notoriously high rents are flat year-over-year in California, while they are up in Florida, New York and Tennessee. While rents decreased year-over-year in about 21% of markets, about 43% are down month-over-month.
Rent growth has cooled nationally due to an increase in multi-family housing supply, as well as fears of a recession dampening demand for rental homes as more people live or move in with family or roommates. . And this could continue, especially if the US economy slips into recession. The rental market is just as uncertain as the housing market – although some investment firms are betting on a long-term rental boom in 2024 and are eyeing build-to-rent developments as an attractive investment opportunity.
Bottom-line
Rent prices have fluctuated since last fall, but are flat year-over-year. Existing home sales are also rising and shrinking, and uncertainty remains about the fate of the US economy. The Fed could get a soft landing – or unemployment could rise, and housing prices could fall further. Investors need to use all the information available to them, including changes in rent prices, to make their best guess about how different markets will fare. But they should also be prepared for all the consequences and take investment decisions with a backup plan.
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Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
