Apartment List National Rent Report

Overview

Welcome to the June 2023 Apartment List National Rent Report. Our national rent index increased by 0.5 percent over the course of May. This is the fourth straight monthly increase in rent prices, but rent growth is flattening out at a time of year when it’s normally picking up steam. Rent growth this year is coming in slower than average, and even though prices are trending up again, a combination of sluggish demand and increasing supply is keeping prices in check.

Year-over-year rent growth is continuing to decelerate, and now stands at just 0.9 percent, its lowest level since March 2021. Year-over-year growth is now solidly below the average rate from 2018 to 2019 (2.8 percent), and could possibly even dip into slightly negative territory in the months ahead.

On the supply side, our vacancy index currently stands at 7 percent, surpassing the average pre-pandemic rate and continuing to trend upward. With a record number of multi-family apartment units currently under construction, some property owners may start struggling to fill vacancies for the first time since the early stages of the pandemic.

Rents increased in May in 76 of the nation’s 100 largest cities, but at the same time, 48 of the top 100 cities are currently logging negative year-over-year growth up from 40 cities last month. Scottsdale, AZ saw the nation’s sharpest month-over-month rent declining in May (-0.9%), continuing a broader slowdown in the Phoenix metro.

Rents nationally increase by 0.5% month-over-month; prices up 0.9% year-over-year

The national median rent increased by a record-setting 17.6 percent over the course of 2021. This rapid growth in rent prices has been a key contributor to overall inflation, which remains top-of-mind for policymakers and everyday Americans alike. While our index has shown that rent growth has been consistently cooling since early last year, the housing component of the official inflation estimates produced by the Bureau of Labor Statistics (the Consumer Price Index, or CPI) is just now appearing to reach its peak.¹ This is because movements in market rents lead movements in average rents paid, meaning that our index can signal what is likely ahead for the housing component of CPI.

The national median rent increased by 0.5 percent month-over-month in May. We are in peak season for the rental market, when rent growth usually ramps up. However, this month’s data shows rent growth stalling, not accelerating. Prices have been rising for four straight months, but rent growth in April and May (+0.5 percent) came in slightly slower than what we saw in March (+0.6 percent).

The stagnant rent growth that we’ve seen over the past couple of months indicates that the market cooldown that started in the second half of 2022 is continuing, even if prices are now trending up. This month’s 0.5 percent increase was the second slowest May rent growth of any year in the history of our rent estimates (going back to 2017), ahead of only 2020, when prices fell in May amid the turmoil of the early pandemic. From 2017 to 2019, rents increased by an average of 1.1 percent in May, more than double this month’s increase.

Year-over-year rent growth is continuing to decelerate and now stands at just 0.9 percent, down from 1.8 percent last month. This month marks the lowest year-over-year growth rate that we’ve seen since March 2021, when rents were just starting to rebound from the modest declines of 2020. Year-over-year growth is now solidly below the average rate that we saw in pre-pandemic years; from 2018 to 2019, year-over-year rent growth averaged 2.8 percent. It’s likely that the year-over-year growth rate will continue to fall at least through the end of the summer, as monthly rent increases in 2023 continue to lag those of 2022. In fact, it’s now looking increasingly likely that year-over-year growth could even dip into negative territory in the months ahead.

So far in 2023, rents are up by a total of 1.9 percent and are trending slower than every previous year measured by our index, aside from 2020. From 2017 to 2019, rent growth from January through May averaged 2.7 percent, and during the rapid inflationary period of 2021 and 2022, rent growth averaged 5.2 percent through May. This year, as recession fears continue to grip many Americans, it’s likely that some households are delaying moves, translating to sluggish rental demand. And even if demand rebounds over the summer, a robust supply of new inventory hitting the market this year will continue to keep prices in check. The surging rent growth that we saw in 2021 and the first half of last year is now solidly behind us.

Vacancy index rising above pre-pandemic baseline

As we’ve explored in detail, much of the 2021 rent boom was attributable to a tight market in which more households were competing for fewer vacant units. Our vacancy index spiked above 7 percent in the early months of the pandemic in 2020, as many Americans consolidated households and moved in with family amid the uncertainty and economic disruption of the pandemic’s onset. After that, however, rapid household formation drove a sharp tightening of the vacancy rate, which eventually fell to a low of 4.1 percent in fall 2021.

But after bottoming out at 4.1 percent in October 2021, our national vacancy index has been gradually easing for over a year and a half, and the rate of easing has picked up steam since last summer. From January through August of last year, our vacancy index was inching up by an average of 11 basis points per month; but from last September through this month, the average increase has been 21 basis points per month. The vacancy rate now sits at 7 percent, which is higher than the average 6.6 percent rate from 2018 to 2019, and nearing the pandemic peak of 7.2 percent reached in July 2020.

This easing has shown no signs of slowing, and it’s likely that the vacancy rate will continue to trend even further upward in the months ahead. New apartment construction is recovering from pandemic-related disruptions, and there are now more multifamily units under construction than at any point since 1970. As this new inventory continues to hit the market over the course of the year, we are now entering a phase in which property owners are beginning to compete for renters to fill their units, a marked change from the prevailing conditions of the past two years, in which renters have been competing for a limited supply of available inventory.

Vacancy trends are highly localized, and they have been a key indicator of rapidly evolving conditions in local markets across the U.S. throughout the pandemic. To explore the topic in greater detail, monthly vacancy data are now available for download for hundreds of cities, metros, and states, and can be easily linked to our existing rent estimates using Federal Information Processing System (FIPS) codes.

Rents rise month-over-month in 76 of 100 largest cities; 48 cities have seen prices fall year-over-year

The chart below visualizes monthly rent changes in each of the nation’s 100 largest cities from January 2019 to present. The color in each cell represents the extent to which prices went up (red) or down (blue) in a given city in a given month. In 2020, we can see that rents fell sharply in many of the nation’s largest and most expensive cities, while smaller and more affordable ones picked up steam, leading to some convergence in prices. Meanwhile, the dark red band in 2021 represents the rent heatwave which peaked in July and August 2021 when all 100 cities in this chart saw prices go up. The rightmost columns show the recent cooldown and now the return back to modest positive growth.

Rents increased this month in 76 of the nation’s 100 largest cities, up slightly from 69 cities last month. New York City saw among the nation’s fastest rent growth in May with a 2 percent increase, continuing to rebound from a particularly sharp winter dip. The largest month-over-month decline was in Scottsdale, AZ, where prices fell by 0.9 percent, signaling the continuation of a broader cooldown in the Phoenix metro area.

Even with prices generally trending upward over the past month, rents are currently lower than they were in May 2022 in nearly half of the nation’s largest cities. 48 of the 100 largest cities now have negative year-over-year growth, a number that has been steadily increasing in recent months. Notable cities to dip into negative territory this month include Denver, Portland, and Washington, D.C. The sharpest year-over-year decline was in Henderson, NV, where prices have fallen by 6.3 percent since last May. Price declines are now scattered throughout much of the nation, but the sharpest dips are concentrated in the West – particularly in the Phoenix and Las Vegas metros, which have cooled substantially from their early pandemic booms.

Sun Belt cooldown spreads

At the metro level, Las Vegas and Phoenix have both seen prices fall by 4.2 percent over the past year (only the New Orleans metro has seen a larger year-over-year decline at -5.3 percent). And in addition to those two metros, multiple other previously booming Sun Belt markets have now seen their year-over-year growth rates turn negative. The Tampa metro has seen the nation’s third fastest rent growth over the past three years (+39.4 percent), but rents there are down by 1.8 percent over the past year. Similarly, the Riverside metro ranks fifth fastest for three-year rent growth (+34.7 percent), but year-over-year growth there is now -2.2 percent. And in the Austin metro, where new housing is being permitted at the fastest pace of any large metro in the county, all the new supply seems to be tempering rent growth; prices there have also fallen by 1.9 percent year-over-year.

The rightmost column of the table above shows that San Francisco is the only metro where rents are still lower than they were in April 2020. San Francisco is also one of just two metros (the other being New Orleans) to appear in all three columns of the table above, indicating its ongoing sluggishness. Given the recent turmoil in the Bay Area tech landscape, it’s unlikely that we’ll see a strong rebound in the region’s rents anytime soon.

Midwestern markets have seen the fastest rent growth over the past year

At the other end of the spectrum, the fastest metro-level rent growth over the past year has been occurring in the Midwest. Cincinnati leads the pack, with prices there up by 4.9 percent year-over-year, followed by Chicago with an increase of 4.8 percent. Beyond that, four other Midwestern metros – Kansas City, St. Indianapolis, St. Louis, and Columbus – also make the top 10.

Of course, given the recent rental market cooldown, even the metros currently topping this list are experiencing relatively modest growth compared to what we were seeing at this time last year. In May 2022, every single one of the 52 metros with a population over one million logged year-over-year growth rates greater than Cincinnati's current 4.9 percent rate which is now the nation’s fastest.

Conclusion

May’s 0.5 percent national rent increase matches the rate of growth than we saw last month, indicating that the market remains sluggish even as rents continue on an upward trajectory. Year-over-year growth fell again to 0.9 percent – putting it solidly below the pre-pandemic average from 2018 to 2019 – and could even dip into negative territory within the next couple of months. And even if demand rebounds over the summer, a strong construction pipeline should temper rent growth for the remainder of the year.

For complete data, explore the interactive map below or head over to our rental data page, where you can download the most recent estimates for your city, as well as historic data going back to 2017. And as always, feel free to contact us with any questions!

A Note on Our Rent Estimate Methodology

Apartment List has long been committed to making our rent estimates as accurate and transparent as possible. We estimate rent growth using a same-unit approach that controls for compositional changes in the rental stock. We also control for price fluctuations that arise over the course of a vacancy by identifying the last available list price before a unit gets rented as a proxy for its transacted price. Finally, we combat luxury bias in our rent data by benchmarking our reported rent levels to fully-representative median rent statistics from the Census Bureau’s American Community Survey.

A full report on our new methodology is available here. And if you have any questions or custom data requests, you can reach us at research@apartmentlist.com.

For more context on local data, check out our market-specific rent reports for the following cities:

• Atlanta, GA
• Austin, TX
• Baltimore, MD
• Boston, MA
• Boulder, CO
• Charlotte, NC
• Chicago, IL
• Cleveland, OH
• Colorado Springs, CO
• Dallas, TX
• Denver, CO
• Detroit, MI
• Fort Collins, CO
• Fort Lauderdale, FL
• Houston, TX
• Indianapolis, IN
• Jacksonville, FL
• Los Angeles, CA
• Miami, FL
• Minneapolis, MN
• Nashville, TN
• New Orleans, LA
• New York, NY
• Orlando, FL
• Phoenix, AZ
• Raleigh, NC
• San Antonio, TX
• San Diego, CA
• San Francisco, CA
• San Jose, CA
• Seattle, WA
• Tallahassee, FL
• Tampa, FL
• Tucson, AZ
• Washington, DC

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About Apartment List Rent Reports:

Apartment List’s Rent Reports cover rental pricing data in major cities, their suburbs, and their neighborhoods. We provide valuable leading indicators of rental price trends, highlight data on top cities, and identify the key facts renters should know. As always, our goal is to provide price transparency to America’s 105 million renters to help them make the best possible decisions in choosing a place to call home. Apartment List publishes Rent Reports during the first calendar week of each month.