Median Rent Prices Fall for Third Consecutive Month

While many Americans continue to grapple with the increased cost of living and overall housing affordability, the Realtor.com July Rental Report revealed a third consecutive month of rent declines compared to the same time last year.

With a continued decline in year-over-year rent prices for 0–2 bedroom properties, the overall share is down -1.0% from July 2022, driven in part by rising rental supply.

The median asking rent in the 50 largest metros increased $15 to $1,759 from June to July 2023, but remains down $18 from the peak 12 months ago. July also marks the first year-over-year decrease in rent for studio units since 2020, continuing the downward trend led by two-bedroom units in May and one-bedroom units in June.

Affordability Highlights:

• In July 2023, nationwide rent was slightly more affordable than in the previous year. Renters earning the typical household income devoted 25.9% of their income to leasing a typical for-rent home (vs. 26.5% in July 2022).
• Some eight of the top 50 metros had a rent share higher than 30% relative to the median household income. Miami, FL, was the least affordable rental market in July 2023. The median rent for a typical 0–2 bedroom unit in Miami, FL, is 1.5 times as high as the estimated maximum affordable rent for the median household.
• Oklahoma City is the most affordable rental market in July 2023. The median rent for a typical 0-2 bedroom unit made up 61% of its estimated maximum affordable rent, while the proportion was 59% a year ago.
• The report showed that affordability eroded most in more affordable markets such as Milwaukee-Waukesha, WI, Birmingham, AL, and Indianapolis, which experienced faster rent growth.

"Renters in many areas are now spending slightly less on rent relative to their overall income, giving their budgets a little more breathing room at a time of stubborn inflation and ongoing affordability concerns," said Danielle Hale, Chief Economist at Realtor.com. "With our midyear forecast update noting a surge in multi-family construction and an uptick in vacancy rates, we anticipate this downward pressure on rent prices will continue, providing many renters with much-needed stability in their housing expenses. Given the current rental market momentum and seasonal trends, it will be very unlikely to see a new peak rent in 2023."

Top 10 Most Affordable Rental Markets:

1. Oklahoma City
2. Columbus, OH
3. Minneapolis-St. Paul-Bloomington
4. Cincinnati, OH-KY-IN
5. Kansas City, MO-KS
6. Louisville/Jefferson County, KY-IN
7. St. Louis, MO-IL
8. Raleigh-Cary, NC
9. Virginia Beach-Norfolk-Newport News, VA-NC
10. Indianapolis-Carmel-Anderson, IN

Middle America remains an affordable oasis between costly coastal locations, for now

The least affordable markets in July 2023 include coastal and Sun Belt locations, where renters often spend more than 30% of the median household income on housing costs. Miami was by far the least affordable rental market, followed by Los Angeles, San Diego, New York City, Boston, Riverside, CA, Tampa, FL, and Orlando, FL.

In three of these eight cities, affordability has worsened compared with last year. In Miami, for example, renters would have spent 44.2% of their monthly paycheck on the typical rental in July 2023. Oklahoma City was the most affordable rental market in July 2023, with renters spending 18.4% of their median household income on housing. Other affordable rental markets include midwestern mainstays such as Columbus, Ohio; Minneapolis; Cincinnati; and Kansas City, KS.

South and West affordability improves, Midwest rents rise

While rents in the South and West remain high, these areas show improved affordability, following a consistent downward rental cost trend during the preceding months. The most significant improvement was Riverside, CA, where renters with a typical household income would spend 33.9% of their monthly paycheck on the typical rental in July 2023; while higher than the 30% affordability threshold, this represents a decline of 3.4 percentage points compared with 12 months ago.

Meanwhile, strong demand in Midwest markets such as Milwaukee-Waukesha, WI; Birmingham, AL; and Indianapolis is driving lower vacancy rates and faster rent growth, eroding affordability in more traditionally budget-friendly locations. In Q2 of 2023, the rental vacancy rate slid 1.5 percentage points in Milwaukee; 1.8 percentage points in Birmingham, AL; and 2.1 percentage points in Indianapolis; over the past year.

"As renters determine their next move, whether it's to stay put, save up to buy a home, or move and rent in a new location, the rental landscape is showing signs of improvement," said Jiayi Xu, Economist at Realtor.com.

To read the full report, including more data, charts, and methodology, click here.