Aleksandarnakic | E+ | Getty Images
The construction boom in the US has resulted in lower rents and other benefits for renters.
Record construction activity since the pandemic has increased the supply of vacant units, meaning more inventory is available for renters. More multifamily units were completed in June than any other month in nearly 50 years; according to to Zillow Group, an online marketplace for real estate.
Landlords are paying attention and are now adding rental discounts – discounts, incentives or perks to attract new tenants – such as free weeks of rent or free parking.
About a third, 33.2 percent, of landlords offered at least one rent concession in July across the U.S., up from about a quarter, 25.4 percent. last year, Zillow I establish.
More from Personal Finance:
Here’s When It Makes Sense to Leverage Your Home Equity: ‘It Won’t Go Stale’
Housing affordability is “moving in the right direction,” the economist says
What you need to know before you refinance or buy
Meanwhile, the median rent price for one- to three-bedroom apartments fell in July, the first time this has happened since 2020; according to to Redfin, a real estate brokerage website.
The average rent for a studio or one-bedroom apartment fell 0.1 percent to $1,498 a month. Two-bedroom apartments fell 0.3% to $1,730. and units with three or more bedrooms, fell 2.% to $2,010, according to Redfin data.
Rents are still high because of how much prices have risen during the pandemic, said Chen Zhao, who leads Redfin’s finance team. But now, rent growth has leveled off, which can be seen as “good news for renters,” he said.
Sun Belt states are leading the trend
Metro areas in Florida and Texas, two Sun Belt states that have brought in large numbers of new apartment construction since the pandemic, are seeing significant rent The price drops as more units become available, according to Redfin.
For example, the median rent price in Austin, Texas, fell to $1,458 in July, down 16.9% from a year earlier. according to to Redfin. It was the biggest drop among all other metro areas analyzed in the national report, the company noted.
The median asking rental price in Jacksonville, Fla., fell 14.3% over the same time period, to $1,465, according to Redfin.
For a statewide comparison, the median rent in Texas is $1,950; according to on Zillow. That comparable price in Florida is $2,500 I establish.
Rent concessions are up from a year ago in 45 of the 50 largest U.S. metro areas, according to Zillow.
Year-over-year growth in the share of rental listings offering concessions is highest in Jacksonville, Florida, where concessions increased 17 percentage points, followed by Charlotte, North Carolina (15.7 points), Raleigh, North Carolina (14.7 units), Atlanta (14.5 units). points); and Austin, Texas (14.1 points), according to Zillow data.
How rising wages help the cost of rents
Historically, wage growth and rent growth have been highly correlated, said Orphe Divounguy, senior economist in Zillow’s Economic Research group.
How tight the labor market is can be predictive of how tight the housing market will be, he explained.
The labor market has recently eased, with the number of applicants outstripping available jobs. In July, nonfarm payrolls rose by just 114,000 in the month, from 179,000 in June. according to at the Bureau of Labor Statistics. The unemployment rate jumped to 4.3%, the highest level since October 2021.
“When wages rise quickly, that helps support housing demand,” DiVungi said. “As the labor market eases, we expect the rental market to continue to ease.”
Wages are rising 4% to 5% a year, Zhao said: “That’s good. That means rents are actually going down relative to wages. Your wages are going up more than rents.”
Certainly, wage growth has slowed. Wages and wages rose 5.1% in June for the 12 months ending June 2024; according to at the Bureau of Labor Statistics.
Wage growth peaked at 9.3% in January 2022 and has fallen to 3.1% by mid-June, returning to pre-pandemic wage levels. according to at the Indeed Hiring Lab Institute.
