Rent growth is likely to keep slowing as rising interest rates continue to cool the economy, as asking rents climbed to a record high in August, while rent growth moderated for the third-straight month. According to a new report from Redfin, the national median asking rent was up 11% year-over-year to $2,039, —the smallest annual increase in a year, down from a peak gain of 19% in March. On a month-over-month basis, the median asking rent climbed 0.4%, the slowest growth since December 2021 and down from a 1.6% increase a year earlier.
“Rent growth will likely slow further as the Federal Reserve continues to raise interest rates," said Redfin Deputy Chief Economist Taylor Marr. "Higher interest rates impact the rental market because they put a damper on spending power in the economy as a whole, including renters’ budgets."
Top 10 Metro Areas With Fastest-Rising Rents Year-Over-Year
- Cincinnati, Ohio (26%)
- Pittsburgh, Pennsylvania (22%)
- Indianapolis, Indiana (21%)
- Nashville, Tennessee (20%)
- Portland, Oregon (19%)
- New York, New York (18%)
- Newark, New Jersey (18%)
- Nassau County, New York (18%)
- New Brunswick, New Jersey (18%)
- San Antonio, Texas (17%)
In Cincinnati, asking rents rose 26% year over year in August, the largest jump among the 50 most populous U.S. metropolitan areas. Pittsburgh, Indianapolis, and Nashville also saw increases of at least 20%. This was the first month since August 2021 that no metro area saw rents increase 30% or more from a year earlier.
Metro Areas Where Rents Declined Year-Over-Year
- Milwaukee, Wisconsin (-15%)
- Minneapolis, Minnesota (-7%)
- Jacksonville, Florida (-2%)
- Baltimore, Maryland (-1%)
Four of the 50 most populous metro areas saw rents fall in August from a year earlier, up from three in July. Rents declined 15% in Milwaukee, 7% in Minneapolis, 2% in Jacksonville, Florida, and 1% in Baltimore. Milwaukee and Minneapolis have seen declining asking rents since April.
”Growth in rents is also likely to be slowed by a boost in rental supply," said Marr. There are nearly a million rental units under construction that will hit the market in the coming months and years.”
To view the full report, including more data, charts and methodology, click here.