Apartment List National Rent Report

Overview

Welcome to the September 2023 Apartment List National Rent Report. The rental market continued slowing down this month, with both annual and monthly rent growth turning negative.

Annual rent growth turned negative last month, for the first time since the beginning of the pandemic. Today it stands at -1.2 percent, meaning that on average, apartments across the country are 1.2 percent cheaper today than they were one year ago. This is a major deceleration from recent years, when annual rent growth neared 18 percent nationally and soared to over 40 percent in a handful of popular cities.

Additionally, monthly rent growth turned negative this month, marking the beginning of the rental market’s slow season. Our national rent index decreased 0.1 percent in August, flipping negative one month earlier than it did last year.

Rent swings are largely driven by the balance between the number of vacant apartments available and the number of renters looking to move into them. A massive shortage of vacant units helped drive tremendous rent growth in 2021 and 2022, and today the opposite is true. Our vacancy index has increased for 22 consecutive months and now sits at 6.4 percent, slightly above the pre-pandemic average.¹ Additionally, with a record number of apartments under construction, we expect vacancies to remain strong in the coming months.

On a local level, rents fell month-over-month in August in 53 of the nation’s 100 largest cities, but thanks to sluggish rent growth throughout the past 12 months, prices are down year-over-year in 72 of these 100 cities.

The rental market slowdown in finally reflected in inflation numbers

The primary measure of inflation in the United States is the Bureau of Labor Statistics's Consumer Price Index (CPI), which is heavily influenced by changes in housing prices.² The Apartment List National Rent Index has proven to be a strong leading indicator of the CPI housing and rent components, as we captures price changes in new leases, which eventually trickle down into price changes across all leases (what the CPI measures). Because of these methodological differences, when our index peaked with record-setting rent growth in 2021 (+17.8 percent), the rent component of CPI was still just starting to heat up, even as overall inflation had already become a key economic issue for policymakers and everyday Americans. Now in 2023, our index shows that the rental market has been cooling rapidly for a year, but the CPI housing component has just recently hit its peak. Despite the CPI's measure of housing inflation remaining elevated, topline inflation has already meaningfully cooled. As the CPI housing component now gradually begins to reflect the cooldown that we've long been reporting, it will help to further curb topline inflation in the months ahead.

Rents are down 0.1% month-over-month, 1.2% year-over-year

Rent growth follows a seasonal pattern – prices generally go up during the spring and summer and go down during the fall and winter – and typically, August is the final month of rent increases before the market enters its slow season. But this year the slow season appears to have started a month early, as rents fell 0.1 percent in August.

This is a notable drop compared to the previous five years. From 2018-2022, nationwide August rent growth was typically positive by a few tenths of a percent, with a major jump in 2021 during the period of rapid rent inflation.

On a year-over-year basis, rents are down 1.2 percent. National rent growth is negative for the first time since the early stage of the pandemic, when rental markets were reeling from a dramatic reduction in household formation and dense urban cores in particular experienced a sharp decline in demand for apartments. Seasonal trends suggest that monthly rent growth will continue to slow for the remainder of the year, and it’s possible that annual rent growth will sink further into negative territory in the months ahead.

Year-to-date, rents are up 2.5 percent and trending slower than every previous year measured by our index, aside from 2020. Rent growth from January through August averaged 4.3 percent during the steady-state years of 2017-2019 and then averaged 11.0 percent during the rapid inflationary period of 2021-2022. But this year, prices are being kept in check by sluggish demand as well as a robust supply of new inventory hitting the market. The surging rent growth we observed in 2021 and early-2022 is now solidly behind us.

Apartment vacancies are back above pre-pandemic levels

The price fluctuations that have rocked the rental market over the past three years are largely attributable to changes in apartment vacancies. Early in the pandemic, the Apartment List Vacancy Index rose to 6.8 percent as many Americans consolidated households and moved in with family amid large job losses and economic uncertainty. Then, a suddenly-tight rental market drove rapid rent growth in 2021 and 2022 as more households were competing for a dwindling supply of vacant units. Our vacancy index shrunk from 6.8 percent to 3.9 percent in just over a year.³

But after bottoming out in October 2021, our national vacancy index has been easing steadily for over a year and a half. Apartment vacancies have increased for 22 consecutive months, and in August the index reached 6.4 percent, surpassing pre-pandemic levels and approaching the pandemic peak set in 2020.

This easing has begun to level out a bit in recent months, but there’s still a good chance that the vacancy rate will continue trending 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 remainder of this year and into next, 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 had 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 down month-over-month in 53 of 100 largest cities, down year-over-year in 72

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. We see a typical seasonal pattern in 2019, followed by 2020, where horizontal bands of dark blue represent steep rent drops in some of the nation’s largest and most expensive cities. Meanwhile, the dark red bands in 2021 and 2022 represent the rent heatwave that drove up prices nationwide. But the rightmost columns of the chart show the recent rent cooldown in late 2022 and modest rent growth so far in 2023.

As nationwide rent growth was negative in August, so too was city-level rent growth in more than half of the nation’s 100 largest cities. Furthermore, rents are down year-over-year in 72 of these large cities, and the number of cities falling into negative territory has grown with each consecutive month of data.

In early 2022, all 100 cities were posting positive year-over-year rent increases. The first to turn negative were the early “zoom towns'' in states like Arizona, Nevada, and Idaho that surged in popularity in 2020 when much of the nation’s workforce went remote, but saw a pullback in demand as affordable options dissipated and more jobs were called back to city centers. Since then larger cities have joined the trend, including much of California and the West Coast, Texas, and the Southeast. Currently the sharpest year-over-year decline can be found in Oakland, CA, where prices are down 8.7 percent compared to last August.

The Sun Belt cooldown spreads

At the metro level, year-over-year rent declines are common across Sun Belt metros, topped by Austin, Las Vegas, and Phoenix, where prices are down 5 percent in the last year. In all three of these metros, year-over-year rent growth once peaked above 20 percent in 2021, but has since cooled dramatically. The Austin metro is also significant for permitting new homes at the fastest pace of any large metro in the county, hinting at the important role construction plays in managing long-term affordability.

The Portland, Seattle, and San Francisco metro areas are also experiencing some of the nation’s slowest year-over-year growth, suggesting that the market downturn is not limited to just sprawling, high-growth metros. These denser markets were the ones that slowed first in 2020, and are slowing again today. Portland metro in particular ranks in the top 10 for slowest rent growth over the past 6, 12, and 36 months, signaling that local rent growth has been slow for the entire pandemic period.

Midwestern and Northeastern markets have maintained positive rent growth

At the other end of the spectrum, the fastest recent rent growth has been occurring in metros across the Midwest and New England. Most of the metros ranking high for rent growth over the past 6 and 12 months are located here, including the Chicago, Cincinnati, and Boston metros which can be found in both columns. Of course, given the recent rental market cooldown, even these metros are experiencing relatively modest growth compared to what was measured at this time last year.

Over the longer three-year period, the fastest rent growth is still concentrated in the Sun Belt, even as many metros there cool in 2023. Miami and Tucson are the only two where three-year metro-wide rent growth exceeds 40 percent, but the nearby Tampa, Orlando, and Phoenix metros also rank in the top 10. North Carolina is also a state that has experienced a rapid influx of rental demand over the course of the pandemic, and as a result, the Raleigh and Charlotte metros have seen prices rise roughly 30 percent since August 2020.

Conclusion

August’s 0.1 percent rent decline marks an early start to the rental market’s slow season, and brings year-over-year rent growth to a low that has not been seen since early in the pandemic. As apartment demand wanes throughout the remainder of the year, and apartment supply improves through a strong construction pipeline, expect rent growth to cool further 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 Methodology

Apartment List has long been committed to making our data products as accurate and transparent as possible. Our rent estimates and vacancy index are calculated as follows:

Rent Estimates: 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.

Vacancy Index: Our real-time availability data allows us to calculate a daily vacancy rate for each of our partner properties, which we then average over the course of each month to calculate a monthly rate. Our overall index is an average of these property-level vacancy rates, weighted by the number of units in each property. We restrict our sample to properties that have been on Apartment List for at least six months and that have attained a stabilized vacancy rate of 15% or less.

For those interested in getting deeper in the weeds, please see our rent estimate methodology and vacancy index methodology. 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
• Philadelphia, PA
• Raleigh, NC
• San Antonio, TX
• San Diego, CA
• San Francisco, CA
• San Jose, CA
• Seattle, WA
• Tallahassee, FL
• Tampa, FL
• Tucson, AZ
• Washington, DC

If you would like to get future updates from the Apartment List Research Team, please subscribe to our email list.

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.