October Rental Report: Lease Costs Fall for the Third Straight Month

Highlights

October 2022 marks the ninth month of slowing hire progress, and the third month in a row with a single-digit price for 0-2 bed room properties (4.7% Y/Y).
The median asking hire within the 50 largest metros declined to $1,734, down by $25 from final month and $47 from July’s peak.
The Avail, by Realtor.com®, 2022 Fall Landlord and Renter Survey revealed that almost all renters have already absorbed current hire will increase, and neither negotiating for smaller hire will increase nor shifting to a brand new unit, has aided affordability.
Rents in Solar Belt metros slowed to 1.8% Y/Y. New Orleans, LA (-3.7%), Phoenix, AZ (-1.6%), Atlanta, GA (-0.8%), and Memphis, TN (-0.7%) skilled their first detrimental year-over-year change because the onset of the COVID-19 pandemic.
Studio rents noticed the primary single-digit progress price in 14 months. Lease by measurement: Studio: $1,457, up 6.7% ($92) year-over-year; 1-bed: $1,611, up 4.5% ($69); 2-bed: $1,901, up 3.7% ($67).
Survey outcomes present most landlords nonetheless plan to extend hire over the subsequent 12 months, however the measurement of deliberate will increase has fallen.
Current hire will increase, inflation, and rising rates of interest are impacting renter plans to buy a house, with many reporting they are going to delay their buy and proceed renting for now.

Yr-Over-Yr Lease Progress Dips for the Ninth Month in a Row

In October 2022, the U.S. rental market skilled single-digit progress for the third month in a row after 9 months of slowing from January’s peak 17.4% progress. The median hire progress throughout the highest 50 metros slowed to 4.7% year-over-year for 0-2 bed room properties. It’s the lowest progress price in 18 months however remains to be almost 1.5 occasions quicker than the expansion price seen simply earlier than the pandemic hit in March 2020. The median asking hire was $1,734, down by $25 from final month and $47 from the height.

The deceleration from current highs is according to what we have now seen in recent for-sale data, suggesting that extra typical seasonal cooling is returning to the rental market. Throughout the late fall and early winter, rental demand usually slows as fewer households transfer. As well as, with the mortgage price for a typical 30-year fixed-rate mortgage hovering round 7% and inflation operating at a forty-year excessive, homebuilding exercise continues to lean into multi-family properties. This will increase the availability of rental properties shifting market steadiness, serving to to mood hire progress. In reality, the current uptick within the rental vacancy rate is extra proof that demand doesn’t outmatch rental provide because it has within the final 18 months.

Determine 1: Yr-over-Yr Lease Development

Renters Are Nonetheless Financially Strained Regardless of Cooling Rents

Regardless of cooling rents, the Avail, by Realtor.com®, 2022 Fall Landlord and Renter Survey discovered that almost all renters have already absorbed current hire will increase. Three out of 4 renters (74.2%) who’ve moved previously 12 months reported seeing their hire improve.

The pressure from current hire hikes isn’t unique to renters who’ve lately moved. Almost two-thirds of renters (63.2%) who’ve lived of their present rental between 12 and 24 months, and sure renewed their lease, have additionally reported will increase of their hire. The share of those renters who’ve seen hire rise is up considerably from July, when 52.2% reported hire will increase. These renewing renters noticed a median month-to-month hire improve of $138, down from $160 in July.

Regardless of current hire hikes, few renters report making an attempt to barter with their landlords for a smaller hire improve, and even fewer report negotiating efficiently. About one-third of surveyed renters (34.7%) tried to barter a smaller improve when their landlord most lately raised their hire. Of those renters, solely 17.3% have been capable of safe a lowered improve (6% of all renters).

Many renters are additionally contemplating shifting to search out extra affordability. Almost 7-in-10 renters (69.5%) who’ve skilled a current hire improve are contemplating shifting to a extra inexpensive rental, up from 66.2% in July. These contemplating shifting are in search of a 12.5% value discount, or about $200 per 30 days for the median renter—up from 10.3%, or about $125, in July. Renters in search of extra affordability by shifting might wrestle to search out it, nevertheless. Those that moved previously 12 months reported a median hire improve of $300 per 30 days.

Solar Belt Rents Proceed to Cool Down Quicker

Renters who’re focused on dwelling in Solar Belt areas might really feel a quicker market cooling off than different elements of the nation. In accordance with Realtor.com® knowledge, in October 2022, the year-over-year progress price for 0-2 bed room properties throughout Solar Belt metros was 1.8%, 2.9 proportion factors decrease than the nationwide common. Just like last month’s finding, metros with detrimental progress charges are all clustered within the Solar Belt areas. In October, hire declined in Riverside, CA (-4.7%), Sacramento, CA (-3.4%), Tampa, FL (-2.5%), and Las Vegas, NV (-2.5%) on a year-over-year foundation for a second month. As well as, rents in New Orleans, LA (-3.7%), Phoenix, AZ (-1.6%), Atlanta, GA (-0.8%), and Memphis, TN (-0.7%) additionally skilled their first year-over-year dip because the onset of the pandemic. Whereas Solar Belt markets have cooled quicker than different elements of the nation in current months, the median asking hire within the area was nonetheless 28.6% larger than three years in the past (pre-pandemic), larger than nationwide hire progress for a similar three-year interval (23.6%).

Studio Rents Noticed the First Single-Digit Progress Charge in 14 Months

In October, two-bedroom models noticed a single-digit progress price for the third month in a row. The median hire continues to drop, down by $41 from final month and $83 from July’s peak. The median hire for 2 bedrooms was $1,901 nationally, $67 (3.7%) larger than the identical time final 12 months and up by $377 (24.7%) in comparison with three years in the past.

Lease progress for one-bedroom models additionally saved cooling. The median hire for 1-bedroom models was $1,611, down by $36 in comparison with final month and $54 much less from the height. Nonetheless, it’s nonetheless up by $69 (4.5%) in comparison with the earlier 12 months and 23.2% ($303) larger since October 2019 (earlier than the Covid-19 pandemic).

In October 2022, studios noticed the primary single-digit progress price in 14 months. The median hire for studio models was $1,457, down by $26 in comparison with final month and $41 from the height. Nonetheless, it was nonetheless up by $92 (6.7%) year-over-year and $225 (18.3%) larger than three years in the past.

Desk 1: Nationwide Rents by Unit Measurement

Unit Measurement	Median Lease	Lease YoY	Lease Change – 3 years
Total	$1,734	4.7%	23.5%
Studio	$1,457	6.7%	18.3%
1-bed	$1,611	4.5%	23.2%
2-bed	$1,901	3.7%	24.7%

Determine 2: Nationwide Lease Development by Unit Measurement

Landlords Are Planning Smaller Lease Will increase

Landlords have taken word of the altering rental market panorama, and are planning smaller hire will increase than in earlier quarters. In accordance with the Avail, by Realtor.com®, 2022 Fall Landlord and Renter Survey, 70.4% of surveyed landlords nonetheless plan to lift the hire of no less than one in every of their rental models inside the subsequent 12 months, although that determine is down from 72.1% reported in each April and July.

Whereas most landlords are nonetheless planning to lift the hire, solely 18.3% count on to extend it by greater than 10%, down considerably from 25.4% of surveyed landlords in April. In the meantime, the share of landlords anticipating to lift hire by lower than 5% climbed to 34.1%, up from 28.5% in July. Amongst these landlords, 4 in 5 (80%) point out that growing value of possession has impacted their plans to lift hire, whereas 80.1% cited modifications in rental market costs of their space as having influenced their decision-making.

Although deliberate will increase are cooling, most landlords are usually not keen to barter with tenants over hire costs. In accordance with the survey, solely 17% of landlords report being considerably probably (14.4%) or extraordinarily probably (2.6%) to permit a brand new renter to barter over the value of hire. However for renewing tenants, landlords are barely extra versatile, with 21.9% reporting being considerably probably (17.5%) or extraordinarily probably (4.4%) to barter on hire worth.

Avail, by Realtor.com®, gives a rising library of resources to assist unbiased landlords successfully handle their rental properties. Landlords can entry free rental kinds, in-depth guides, housing analysis, and extra from one handy location.

Residence-Shopping for Plans Are Nonetheless Being Impacted as Renters Wrestle to Save

Ongoing monetary challenges have resulted in a decline in renters contemplating buying a house within the subsequent 12 months. Lower than one-third of renters (32.3%) plan to pursue dwelling possession within the coming 12 months, down from 34.6% in July. Amongst these renters, 83.9% point out that inflation and rising rates of interest impacted their plans—up from a reported 80.8% in July 2022. These not planning to buy a house most continuously cite not having sufficient financial savings for a down cost (44.4%) or believing they’d not qualify for a mortgage (19.6%).

Amongst renters who mentioned their plans have been impacted by rising rates of interest and inflation, 67.5% are contemplating delaying the acquisition of a house and persevering with to hire as a substitute. Nonetheless, the median renter family reported no improve in how a lot they’ll save per 30 days ($100), according to survey findings from July. This lack of enchancment in renter family funds might proceed to trigger renters to reassess their plans to buy a house.

Realtor.com® offers renters a rent vs. buy calculator to assist them determine whether or not shopping for is smart. The calculator might help renters estimate the size of tenure wanted for getting to make extra monetary sense than renting and permits renters to customise for location and tax specification.

Appendix: Rental Information – 50 Largest Metropolitan Areas -October 2022

Metro	Total Median Lease	Total Lease YY	Studio Median Lease	Studio Lease YY	1-br Median Lease	1-br Lease YY	2-br Median Lease	2-br Lease YY
Atlanta-Sandy Springs-Roswell, GA	$1,703	-0.80%	$1,661	2.80%	$1,596	-1.10%	$1,859	-0.40%
Austin-Round Rock, TX	$1,703	2.00%	$1,495	6.40%	$1,551	-0.50%	$1,869	2.30%
Baltimore-Columbia-Towson, MD	$1,755	2.90%	$1,363	-1.00%	$1,672	3.10%	$1,894	4.00%
Birmingham-Hoover, AL	$1,137	3.10%	$952	-9.90%	$1,055	1.80%	$1,199	7.60%
Boston-Cambridge-Newton, MA-NH	$2,894	12.80%	$2,706	25.00%	$2,738	12.20%	$3,152	11.00%
Buffalo-Cheektowaga-Niagara Falls, NY	$1,164	0.00%	$856	7.30%	$1,202	10.60%	$1,190	3.60%
Charlotte-Concord-Gastonia, NC-SC	$1,606	3.40%	$1,511	8.60%	$1,528	3.40%	$1,725	2.40%
Chicago-Naperville-Elgin, IL-IN-WI	$2,032	23.70%	$1,720	51.00%	$1,951	22.40%	$2,183	20.90%
Cincinnati, OH-KY-IN	$1,273	7.00%	$1,182	8.60%	$1,212	6.50%	$1,444	7.60%
Cleveland-Elyria, OH	$1,169	4.60%	$892	7.90%	$1,096	0.30%	$1,287	9.00%
Columbus, OH	$1,237	5.80%	$962	7.00%	$1,176	7.40%	$1,319	3.50%
Dallas-Fort Worth-Arlington, TX	$1,595	5.80%	$1,347	5.70%	$1,445	4.50%	$1,854	5.10%
Denver-Aurora-Lakewood, CO	$1,907	1.10%	$1,607	1.30%	$1,781	0.30%	$2,211	1.00%
Detroit-Warren-Dearborn, MI	$1,247	8.60%	$1,171	14.60%	$1,099	7.70%	$1,379	6.70%
Hartford-West Hartford-East Hartford, CT	$1,726	9.40%	$1,607	18.40%	$1,508	4.80%	$1,894	2.70%
Houston-The Woodlands-Sugar Land, TX	$1,376	2.90%	$1,268	2.70%	$1,267	2.70%	$1,513	2.90%
Indianapolis-Carmel-Anderson, IN	$1,276	9.40%	$1,114	8.70%	$1,160	9.00%	$1,341	4.30%
Jacksonville, FL	$1,463	1.30%	$1,116	10.70%	$1,341	1.20%	$1,555	-4.60%
Kansas City, MO-KS	$1,274	8.70%	$1,019	8.80%	$1,209	10.20%	$1,479	8.90%
Las Vegas-Henderson-Paradise, NV	$1,533	-2.50%	$1,048	0.00%	$1,428	-2.10%	$1,645	-3.70%
Los Angeles-Long Beach-Anaheim, CA	$2,921	4.50%	$2,288	7.10%	$2,720	4.10%	$3,381	4.30%
Louisville/Jefferson County, KY-IN	$1,089	3.30%	$946	3.50%	$1,018	4.70%	$1,146	3.80%
Memphis, TN-MS-AR	$1,270	-0.70%	$1,107	-6.50%	$1,246	-4.30%	$1,346	-1.60%
Miami-Fort Lauderdale-West Palm Beach, FL	$2,686	8.40%	$2,333	9.50%	$2,384	8.40%	$2,960	5.00%
Milwaukee-Waukesha-West Allis, WI	$1,530	5.40%	$1,263	8.10%	$1,415	5.80%	$1,704	0.30%
Minneapolis-St. Paul-Bloomington, MN-WI	$1,527	2.70%	$1,241	1.30%	$1,452	2.10%	$1,808	2.20%
Nashville-Davidson–Murfreesboro–Franklin, TN	$1,625	4.10%	$1,600	-1.10%	$1,532	3.20%	$1,681	3.60%
New Orleans-Metairie, LA	$1,393	-3.70%	NA	NA	NA	NA	NA	NA
New York-Newark-Jersey City, NY-NJ-PA	$2,779	12.70%	$2,486	12.60%	$2,395	8.90%	$3,045	9.30%
Oklahoma City, OK	$946	9.70%	$768	6.90%	$839	4.80%	$1,032	13.30%
Orlando-Kissimmee-Sanford, FL	$1,805	5.90%	$1,632	10.60%	$1,679	6.20%	$2,030	5.10%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	$1,734	4.10%	$1,441	12.30%	$1,642	4.20%	$1,844	-0.80%
Phoenix-Mesa-Scottsdale, AZ	$1,625	-1.60%	$1,309	-0.30%	$1,489	-2.70%	$1,746	-4.40%
Pittsburgh, PA	$1,440	3.70%	$1,198	13.30%	$1,470	5.00%	$1,475	1.00%
Portland-Vancouver-Hillsboro, OR-WA	$1,774	5.10%	$1,447	3.50%	$1,678	3.40%	$1,935	2.60%
Providence-Warwick, RI-MA	$2,020	13.60%	NA	NA	NA	NA	NA	NA
Raleigh, NC	$1,538	3.60%	$1,412	3.60%	$1,439	5.20%	$1,682	4.00%
Richmond, VA	$1,371	5.60%	$1,243	14.60%	$1,256	8.50%	$1,523	4.50%
Riverside-San Bernardino-Ontario, CA	$2,171	-4.70%	$1,492	-14.60%	$1,920	-4.60%	$2,188	-2.90%
Rochester, NY	$1,350	8.00%	$1,035	18.10%	$1,314	12.70%	$1,459	9.30%
Sacramento–Roseville–Arden-Arcade, CA	$1,876	-3.40%	$1,586	-9.40%	$1,740	-2.60%	$2,012	-0.50%
San Antonio-New Braunfels, TX	$1,324	4.70%	$1,113	0.00%	$1,199	3.70%	$1,490	2.90%
San Diego-Carlsbad, CA	$2,793	3.10%	$2,285	6.40%	$2,531	2.30%	$3,076	0.90%
San Francisco-Oakland-Hayward, CA	$3,031	5.80%	$2,488	8.90%	$2,767	3.50%	$3,450	4.50%
San Jose-Sunnyvale-Santa Clara, CA	$3,268	9.60%	$2,582	9.00%	$2,943	8.50%	$3,620	9.10%
Seattle-Tacoma-Bellevue, WA	$2,161	2.70%	$1,841	6.60%	$2,113	1.40%	$2,511	4.00%
St. Louis, MO-IL	$1,220	3.80%	$947	4.10%	$1,141	3.80%	$1,283	1.40%
Tampa-St. Petersburg-Clearwater, FL	$1,784	-2.50%	$1,476	-2.80%	$1,650	-2.20%	$1,968	-4.60%
Virginia Beach-Norfolk-Newport News, VA-NC	$1,463	3.90%	$1,386	19.50%	$1,386	3.00%	$1,480	-2.40%
Washington-Arlington-Alexandria, DC-VA-MD-WV	$2,126	4.90%	$1,771	5.10%	$2,008	3.00%	$2,454	4.60%

Methodology

Rental knowledge as of October for models marketed as for-rent on Realtor.com®. Rental models embrace condo communities in addition to non-public leases (condos, townhomes, single-family properties). All models have been studio, 1-bedroom, or 2-bedroom models. We use communities that reliably report knowledge every month inside the prime 50 largest metropolitan areas. Nationwide rents have been calculated by averaging the medians of the 50 largest metropolitan areas. Realtor.com® started publishing common month-to-month rental developments studies in October 2020, with knowledge historical past stretching again to March 2019.

With the discharge of its August 2022 rent report, Realtor.com® included a brand new and improved methodology for capturing and reporting extra complete rental itemizing developments and metrics. The brand new methodology is anticipated to yield a cleaner, extra consultant, and extra constant measurement of rental listings and developments at each the nationwide and native ranges. The methodology has been adjusted to higher signify the true value of major housing for renters. Most areas throughout the nation will see minor modifications with a smaller handful of areas seeing bigger updates. On account of these modifications, the rental knowledge launched since September 2022 won’t be straight comparable with earlier releases (recordsdata downloaded earlier than September 2022) and Realtor.com® economics weblog posts. Nonetheless, future knowledge releases, together with historic knowledge, will constantly apply the brand new methodology.

The Avail, by Realtor.com®, 2022 Fall Landlord and Renter Survey collected responses from a nationally consultant pattern of greater than 2,700 unbiased landlords and renters. The survey was performed between November 1st, 2022, and November ninth, 2022. The margin of error for unbiased landlords is ± 3.1%, and ± 2.4% for renters. Avail, by Realtor.com®, recurrently conducts rental market analysis to grasp the wants of unbiased landlords and their renters. Go to the Avail Housing Research web page and be part of the particular studies mailing checklist to remain up-to-date on information, developments, and insights into the unbiased rental market.