(NEXSTAR) – Renters may finally be able to take a breather next year.
Of the 100 cities analyzed in Zumper’s annual rent report released this week, 55 saw rent prices fall compared to last year. Additionally, his 17 cases were flat compared to the previous year.
The report predicts that rental prices will continue to “soften” until at least the first half of 2024.
Zumper said part of the reason for the drop in prices is the recent increase in supply as new apartment buildings and complexes continue to open in fast-growing cities. Real-time data providers such as Zillow and ApartmentList also show that rent growth for new apartments is plummeting.
Nationwide, one-bedroom rental prices fell by a tenth of a percent in 2023, Zumper reports, but are expected to fall even more sharply in 2024 in cities where supply has caught up with demand. . Sunbelt cities from Phoenix to Austin to Orlando all saw one-bedroom rents drop between 5% and 11%.
“This trend is most evident in some of the most popular Zoom towns during the pandemic.
Phoenix and Austin,” the report states. “Texas cities, especially Austin and Dallas, are very bullish on bringing new multifamily developments to market.”
Outside the Sunbelt, Denver, Las Vegas, and Salt Lake City have all attracted new residents over the years. With so much new development happening, the rental market could be filled with more vacant homes than people looking to rent, Zamper said.
“Some cities in mountain regions are approaching oversupply,” explains Zumper CEO Anthemos Georgiades. “Prices in these cities are expected to fall faster than the national average.”
With a surge in the supply of new apartments coming online in 2024, it could be a good time for renters to find a good deal or upgrade to a better space.
If interest rates are lowered, as expected next year, some wealthy renters may choose to become homebuyers, meaning there will be even less competition for luxury rentals.
In the Midwest, rents appear to be stable in large cities like Chicago, Milwaukee, and Minneapolis. “These cities are not necessarily the best for remote work,” Zumper writes. “But it is also quietly attracting new residents looking for a more affordable and relaxed lifestyle.”
But some places, like New York City, the rent report says are “notoriously undersupplied.” The average price for a one-bedroom is over $4,100, and the average price for a two-bedroom is about $4,800.
Zumper predicts the market is easing in the 100 cities surveyed, but overall housing costs remain one of the key drivers of inflation. Rental prices rose 0.5% from October to November and rose 6.9% over the past year, according to the Bureau of Labor Statistics. While these increases are down from recent peaks, they are still much steeper than before the pandemic.
The Associated Press contributed to this report.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.