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Rent growth has been cooling since reaching a peak of 17.1% year-over-year in February. Americans’ demand for housing has waned this year, after booming in 2021, thanks to higher costs of rent and generally high inflation. More people are doubling up with roommates or family, pushing up the rental vacancy rate and thereby putting some pressure on landlords to keep rent hikes in check. This slower pace of rent growth is likely to show up in official measures of rent inflation in early 2023.
Where rents are falling fastest, and where they’re still rising
Rents are falling fastest month-over-month in Raleigh (-1.3%), Austin (-1.2%), Seattle (-1.1%), San Jose (-1.1%) and New York City (-1.0%). These are some of the most expensive rental markets, and include some of the biggest tech employment hubs in the country, an industry that has seen more than its share of layoffs this fall.
Rents are still rising on a monthly basis in Louisville (0.7%), Memphis (0.6%), Buffalo (0.5%), Birmingham (0.4%) and Miami (0.4%). These markets tell a story of continued strength in more affordable parts of the American heartland, as well as Miami’s remarkably persistent demand growth as a sunny migration destination throughout the pandemic.
Migration pressures easing in the Inland West
On a year-over-year basis, rents have climbed the least in Las Vegas (0.2%), Sacramento (0.5%) and Phoenix (3.0%), three markets rode a boom-bust cycle thanks to a mid-pandemic surge of migration attributable to their status as relatively affordable Inland West alternatives to pricey coastal cities like Los Angeles and San Francisco. The rapid cooldown of rent growth in these markets suggests that migration pressures have eased or even reversed now.
The most expensive major market is San Jose, where typical monthly rent is $3,283, followed by San Francisco ($3,138), New York ($3,130), San Diego ($3,056), and Los Angeles ($2,950).
