Higher Wages, Steady Rental Market Have Allowed Renters to Catch Their Breath (May 2024 Rental Market Report)
U.S. rents continued their steady climb in May. The typical rent price is now $2,036 according to the Zillow Observed Rent Index, up 0.6% month over month and 3.4% since last year.
The remarkably steady rental market, along with continued earnings growth, has allowed renters to catch their breath after rent affordability briefly teetered over the 30% cliff in late 2021 and 2022. Annual rent growth has hovered between 3.3% and 3.5% in each of the past 10 months.
A household earning the median renter income would now spend 29.7% of their earnings on a typical U.S. rental, the same as last month and last year.
The share of rental listings on Zillow offering a concession — a freebie such as free weeks of rent or free parking as an incentive — fell from April. About a third (33%) of May rental listings on Zillow were advertising a concession, down slightly from 33.6% in April. Concessions had risen in nine of the previous 10 months, including the past three. The reversal could indicate more landlords and property managers are feeling confident about their chances of finding a renter as we enter the busy summer months. The share of rentals offering a concession tends to follow the rental vacancy rate, which is no longer increasing.
Rents
- Asking rents are $2,036 in May, according to the Zillow Observed Rent Index, up 0.6% month over month. The pre-pandemic average month-over-month change for this time of year is 0.7%.
- Since the beginning of the pandemic, rents have increased by 32.1%.
- Rents are now up 3.4% from last year.
- Rents fell, on a monthly basis, in only two major metro areas: Birmingham (-0.3%) and Tampa (-.04%).
- Annual rent increases are largest in Providence (7.1%), Hartford (7%), Louisville (6.4%), Cleveland (6.3%) and Buffalo (6%).
Single-Family Rents
- Asking rents for single-family homes are $2,262 in May, up 0.5% month over month. Since the beginning of the pandemic, single-family rents have increased by 39.1%.
- Single-family rents are now up 4.7% from last year.
- Single-family rents fell, on a monthly basis, in only one major metro area: Richmond (-0.2%).
- Annual single-family rent increases are highest in St. Louis (8.2%), Cleveland (7.7%), Milwaukee (7.6%), Cincinnati (7.4%) and Buffalo (7.2%).
Multifamily Rents
- Asking rents for multifamily homes are $1,896 in May, up 0.6% month over month. Since the beginning of the pandemic, multifamily rents have increased by 25.9%.
- Multifamily rents are now up 2.6% from last year.
- Multifamily rents fell, on a monthly basis, in four major metro areas: Birmingham (-0.5%), Oklahoma City (-0.4%), Tampa (-0.2%) and New Orleans (-0.1%).
- Annual multifamily rent increases are highest in the New York City metro area (8.9%), Hartford (7.5%), Providence (7.5%), Louisville (6%) and Buffalo (5.9%).
Rent Concessions
- 33% of rentals on Zillow offered concessions in May.
- The share of rental listings offering concessions decreased by 0.5 percentage points (ppts) month over month in May.
- The share of rental listings offering concessions increased by 6.7ppts from last year.
- The share of rentals with concessions is lower, on a monthly basis, in 30 major metro areas. The largest monthly drops in the share of rentals with concessions are in San Jose (-9ppts), Raleigh (-5ppts), Austin (-4.3ppts), Sacramento (-4.2ppts) and Richmond (-4.1ppts).
- The share of rentals with concessions is higher, on a monthly basis, in 19 major metro areas. The largest monthly increases in the share of rentals with concessions are in Indianapolis (3.6ppts), Hartford (3.3ppts), Las Vegas (2.6ppts), Memphis (2.5ppts) and Columbus (2.4ppts).
- Rent concessions are up from year-ago levels in 46 of the 50 largest metro areas. The annual increase in share of rental listings with concessions is highest in Jacksonville (17.2ppts), Atlanta (13.5ppts), Columbus (12.7ppts), Charlotte (12.6ppts) and San Diego (12.6ppts).
Rent Affordability
- The median renter household would spend 29.7% of their income on a new rental in May.
- To comfortably afford the typical U.S. rental, a household needs to make $81,446.
- The most affordable metro areas for renters are Salt Lake City (20.3% of local median renter income spent on a typical rental), Minneapolis (20.3%), St. Louis (20.8%), Austin (21.1%) and Raleigh (21.1%).
- The least affordable metro areas for renters are Miami (43.3% of local median renter income spent on a typical rental), the New York City metro area (40.8%), Los Angeles (37.0%), Riverside (33.7%) and San Diego (33.7%).
