Apartment rents in the U.S. continued their steady decline in October, falling for the fifteenth consecutive month as a wave of new supply keeps market prices in check. The median asking rent for 0-2 bedroom units in the country’s 50 largest metros slipped 0.8% year-over-year to $1,720, according to the latest monthly commentary from Realtor.com, marking a $14 drop from October 2023 and a $40 decrease from the August 2022 peak.
Although the median asking rent continued trending downward last month, Realtor found that they remain significantly above pre-pandemic levels. The median apartment rent in October is $272 higher than in 2019 by 19%, closely mirroring the 22.7% rise in consumer prices over the same period. While the slower pace of growth offers some relief for renters, affordability challenges persist, especially in regions where the supply of apartments is growing slower.
The decline in asking rents, according to Realtor, is being driven by an unprecedented surge in multifamily completions, which have hit levels unseen since the 1980s.
Between January and September 2024, an annualized 606,000 multifamily units were completed, up 36% compared to the same period a year earlier. Developers are focusing on high-growth areas in the South, where rental stock is projected to expand by 1.5% by Fall 2025. This wave of new supply is forcing landlords to get creative, with many offering concessions to attract tenants.
On the other hand, Southern markets such as Memphis and Nashville are seeing some of the steepest declines, with year-over-year rent drops of 5.4% and 4.8%, respectively. Cities along the Sun Belt, including Phoenix and Las Vegas, are also experiencing a slowdown as they absorb new inventory.
All the while cities in the Northeast and West Coast, including New York and San Francisco, are showing greater resilience due to tighter supply pipelines and strong job markets.
Realtor noted that while new construction is helping stabilize prices, it’s not enough to offset longer-term affordability challenges. Rising borrowing costs and construction delays have cooled developer enthusiasm for future projects, raising concerns about a potential mismatch between demand and supply in the coming years.
While the heightened level of annual apartment absorption is expected to persist into 2025, the extent of regional rent declines will depend on how supply plays out. In the South, where rental stock is expected to grow by 1.5% by fall 2025, markets like Dallas and Atlanta are poised for further relief. Meanwhile, the Northeast and West Coast, with constrained pipelines and higher development costs, could see rents hold steady or even climb. These regional imbalances are shaping the next phase of the multifamily market, as developers navigate demand shifts and affordability challenges.