The median asking rent climbed for the fifth consecutive month, up 0.9% year over year to $1,645

SEATTLE, September 10, 2024--(BUSINESS WIRE)--The median U.S. asking rent rose 0.9% year over year in August to $1,645—the biggest annual increase since April 2023. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Rents were up 0.1% on a month-over-month basis.

Rents for 0-1 bedroom apartments ticked up 0.1% year over year to $1,495, while 2 bedroom apartments remained unchanged at $1,725. Rents for 3+ bedroom apartments fell 1.7% to $2,008. The discrepancy between the overall result (showing a 0.9% gain) and the three different bedroom counts (which either fell, remained the same, or rose by a lower amount) is the result of a statistical phenomenon known as Simpson’s paradox.

While rents rose the most in nearly 18 months, August marked two years from when they hit an all-time high. Lower rents, paired with wages growing 3.8% year over year, show that rental affordability has improved.

Multifamily building completions are at historic highs in 2024 and in some areas supply now outweighs demand. That is driving some building owners to reduce rents and offer concessions to prospective tenants.

"Almost everything in our lives costs more than it did two years ago—but rents have remained largely stable thanks to the construction boom, especially across the Sun Belt states," said Redfin Senior Economist Sheharyar Bokhari. "We are seeing rents tick up a little now that new construction is starting to slow down, but asking rents are likely to stay relatively flat for some time due to the backlog of new apartments that are still coming onto the market."

Rents in Austin and other Sun Belt metros continue to fall the fastest

The trend of increased construction leading to lower rents is most obvious in Austin, TX where the median asking rent fell 17.6% year over year in August—the steepest decline of the 33 major metros Redfin analyzed. In dollar terms, that means rents in Austin are $317 a month less now than they were a year ago.

Authorities in the Texas capital signed off on the most new construction in the country in an effort to keep up with soaring demand during the pandemic. Demand has now leveled off, but a lot of new apartments are still coming onto the market, so asking rents are falling.