Here is a detailed response to your question about rents rising at 6.6% per year but the pace slowing:
Rent Increases Remain High but Slowing
According to the latest data, rents across the United States continue to rise at an elevated pace, but the rate of increase has started to moderate compared to the record-breaking levels seen in 2022. The median rent in the U.S. is now $1,827 per month, up 6.6% over the past year.
Key Rent Growth Trends
- Rents are up 6.6% year-over-year as of June 2024, according to the Realtor.com Rental Price Index
- This represents a slowdown from the peak rent growth of over 10% seen in mid-2022
- Rents are still rising much faster than the overall inflation rate of around 3-4%
- Rent growth remains strongest in Sun Belt markets like Miami, Tampa, and Las Vegas
- More affordable Midwest and Northeast markets are seeing more moderate rent increases
Factors Driving Rent Growth
- Strong demand from renters as high mortgage rates price many would-be homebuyers out of the market
- Limited new apartment construction in recent years, led to a tight supply
- Investors buying up single-family homes and converting them to rentals
- Inflation and rising costs for landlords, including higher mortgage rates and property taxes
Outlook for Rents Going Forward
- Rent growth is expected to continue slowing as higher interest rates and economic uncertainty weigh on demand
- However, rents are still projected to rise faster than inflation in 2024 and 2025
- Affordability will remain a major challenge for many renters, especially in high-cost coastal markets
- Policymakers are considering measures to increase housing supply and provide rental assistance
In summary, while the pace of rent increases has moderated from the record highs of 2022, rents are still rising rapidly across most of the country. Affordability remains a major concern for many renters, and the outlook for the rental market will depend on how quickly supply can catch up with demand.
