Rents in the US climbed to a new record high again in April, and they are expected to keep rising.
The national median rent was $1,827 a month in April, up 16.7% from a year ago, according to a report from Realtor.com. Rent has been steadily increasing since early last year. If recent trends continue, the report projects the typical rent could be more than $2,000 a month by August.
The continued surge in rental prices is driven by a mismatch between rental supply and rising demand, largely from would-be homebuyers, said Danielle Hale, Realtor.com’s chief economist. Beaten down by the high cost of buying a home, some prospective homeowners are opting to keep renting instead.
“Renters are being left with few options but to meet higher rents and, in some cases, even offer above [the landlord’s] asking price – whether they can afford to or not,” she said.
There are some signs the pace of rent increases is starting to slow. April marks the third consecutive month in which annual rent growth has slowed from the peak in January. Still, while annual price growth dropped slightly from March – when rents climbed 17% year-over-year – last month’s increase was significant.
And some cities saw rent increases that were even more jaw dropping. Miami saw the fastest growth in April, with the median rental price spiking 52% to $2,800. That’s $950 more than it was a year ago.
Other Sun Belt cities also experienced large year-over-year growth, including Orlando and Tampa, Florida; San Diego and Las Vegas.
Pittsburgh, Detroit and Minneapolis saw the smallest annual rent growth in April, all with rents that increased by 5.5% or less annually.
“Rents are not only maxing out renters’ housing budgets, but are the biggest strain on their overall finances, even as inflation drives up expenses across the board,” said Hale.
Rents for studio apartments, which are often the most affordable housing option, continued to grow at a faster rate than larger units. This reverses the pattern from last year, particularly in the largest metros like New York City, where rents for studios are up 29% since last year; Los Angeles, where they are up 23%; and Chicago, with a 22% increase. While studios were quickly vacated early in the pandemic, they are now in higher demand by those looking to move in to a place they can afford on their own or as they return to major city centers.