Rents drop for first time in two years

Apartment rents fell across the U.S. for the first time in two years after climbing to record highs over the COVID-19 pandemic.

August apartment asking rents fell 0.1% from July, reports property data company CoStar Group – small, but the first monthly decline in rents since December 2020.

The Wall Street Journal reported that other surveys showed rent declines of varying degrees. Rent.com showed a 2.8% decrease in rent for one-bedroom apartments over the same period.

Realtor.com, which WSJ disclosed that it operates under license from the National Association of Realtors, also noted a “slight monthly decline” in rent this August.

No matter the size, last month’s rent declines are welcome news for tenants who have been pinched by rising rents during the pandemic, fueled in part by surging home prices that forced some prospective buyers to rent instead.

Rents climbed 23% since August 2020, according to Realtor.com, but may be trending downward for a combination of factors like new apartment construction and consumer pessimism about the red-hot leasing market.

Analysts disagree on whether rents will continue to decline or not. Orphe Divounguy, an economist at Zillow Group, told WSJ that the unfavorable real estate market will keep demand for rentals high.

Others say they expect to see declines continue in the coming months. For example, CoStar predicts rents will also have declined for a second month straight by the end of September.

Relief may be a ways off for many tenants, who generally sign one- or two-year leases at a fixed monthly price.

This accounts for the lag between prices today and inflation as tracked by the Bureau of Labor Statistics, which still measures housing costs as rising. Falling rents will not become apparent in official inflation figures until sometime in 2023, one economist told WSJ.