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Renters Gain an Edge as October Slows Beyond Seasonal Expectations

By Skylar Olsen on 7 Nov 2024

It’s common to see rents fall from September to October due to seasonal changes in demand, but this year that drop was double what is typical, showing a softening of the rental market beyond regular seasonality. Still, rent growth remained stable, with typical U.S. rents just 3.3% higher than a year ago.

San Antonio joined Austin in October as the only two metro areas where rents are lower than they were a year ago. The last time rents fell on a yearly basis in San Antonio was in June, which was also the last month rents fell in any other metro besides Austin.

Multifamily rent growth has slowed even more dramatically as construction completions of multifamily homes continue to hit highs, bringing new units onto the market. About 55,500 new apartments were completed in September, marking a 50-year high for this time of year. This rise in inventory caused multifamily rents to increase by just 2.3% in the past year, while single-family rents increased more substantially at 4.3%.

Typical seasonality combined with the influx of new units has led to softened competition among renters. Zillow’s Observed Renter Demand Index (ZORDI), which measures competition as a function of the number of renters on the market relative to the number of available units on Zillow, dropped to its lowest-ever level in October. As a result, rental vacancy rates are climbing, reaching 6.9% in the third quarter of this year – 0.3 percentage points higher than both last quarter and last year.

In response, concessions have continued to reach new highs. A record 37.7% of rental listings offered a concession in October. This means that more than 1 in 3 listings on Zillow offered things like free parking or weeks of free rent in an attempt to entice renters.

For renters who are looking to move soon, November will likely show continued high levels of concessions and slow year-over-year rent growth, as even more new apartment buildings come onto the market. Renters looking to move this fall will not only face less competition than those in the spring, but also less competition than renters in previous falls.

October 2024 Rental Market Report

Rents

• The typical asking rent is $2,009 as of October, down 0.2% month over month. The pre-pandemic average month-over-month change for this time of year is -0.1%.
• Rents are up 3.3% from last year.
• Since the beginning of the pandemic, rents have increased by 33.5%.
• Rents fell, on a monthly basis, in 34 major metro areas. The largest monthly drops were in San Antonio (-1.1%), Denver (-1.1%), Austin (-1%), Richmond (-0.9%), and Salt Lake City (-0.7%).
• Rents are up from year-ago levels in 48 of the 50 largest metro areas. Annual rent increases were highest in Hartford (7.2%), Cleveland (7%), Louisville (6.4%), Providence (5.8%), and Cincinnati (5.7%).

Single-Family Rents

• The typical asking rent for single-family homes is $2,215 in October, flat from last month.
• Single-family rents are now up 4.3% from last year.
• Since the beginning of the pandemic, single-family rents have increased by 40.5%.
• Single-family rents fell, on a monthly basis, in 25 major metro areas. The largest monthly drops in single-family rents were in Austin (-1%), Boston (-0.7%), San Antonio (-0.6%), Seattle (-0.6%), and Denver (-0.5%).
• Single-family rents are up from year-ago levels in 49 of the 50 largest metro areas. Annual single-family rent increases were highest in Hartford (7.4%), Cleveland (7.4%), Buffalo (7.3%), Louisville (7.2%), and Providence (7.1%).

Multifamily Rents

• The typical asking rent for multifamily homes is $1,855 as of October, down 0.3% month over month.
• Multifamily rents are now up 2.3% from last year.
• Since the beginning of the pandemic, multifamily rents have increased by 26.9%.
• Multifamily rents fell, on a monthly basis, in 41 major metro areas. The largest monthly drops in multifamily rents were in Denver (-1.2%), San Antonio (-1.2%), Orlando (-1.1%), Richmond (-1.1%), and Raleigh (-1%).
• Multifamily rents are up from year-ago levels in 40 of the 50 largest metro areas. Annual multifamily rent increases were highest in Hartford (7.4%), Cleveland (6.3%), Providence (5.7%), Louisville (5.6%), and Cincinnati (5.3%).

Rent Concessions

• 37.7% of rentals on Zillow offered concessions in October.
• The share of rental listings offering concessions increased by 1.9 percentage points (ppts) month over month in October.
• The share of rental listings offering concessions increased by 7.6ppts from last year.
• The share of rentals with concessions is lower, on a monthly basis, in eight major metro areas. The largest monthly drops in the share of rentals with concessions were in Virginia Beach (-4.3ppts), Kansas City (-1.5ppts), New Orleans (-1.2ppts), Richmond (-0.4ppts), and Cleveland (-0.3ppts).
• The share of rentals with concessions is higher, on a monthly basis, in 41 major metro areas. The largest monthly increases in the share of rentals with concessions were in San Jose (6.4ppts), Indianapolis (6.2ppts), Seattle (5.4ppts), Hartford (4.9ppts), and Birmingham (4.4ppts).
• Rent concessions are up from year-ago levels in 47 of the 50 largest metro areas. The annual increase in share of rental listings with concessions was highest in Louisville (18.7ppts), Raleigh (18ppts), Denver (14.7ppts), Hartford (14ppts), and Austin (13.7ppts).

Rent Affordability

• The median household would spend 28.9% of their income on a new rental in October.
• Rent burdens increased by 0.1ppts month over month in October. The pre-pandemic share of median household income spent on rent was 27.6%.
• Rent affordability is now flat from last year.
• The most affordable metro areas for rents are Austin (19.4% of median household income spent on typical rent), Salt Lake City (19.6%), Minneapolis (19.9%), St. Louis (19.9%), and Milwaukee (20.5%).
• The least affordable metro areas for rents are Miami (41.8% of median household income spent on typical rent), New York (39.5%), Los Angeles (36.6%), Riverside (33.2%), and San Diego (32.9%).

• Income needed to afford rent increased by 3.3% year over year in October to $80,362.
• Since pre-pandemic, the income needed to afford rent has increased by 32.4%.

Rental Vacancy Rate (Quarterly Data)

• The non-seasonally adjusted rental vacancy rate was 6.9% in the third quarter. The pre-pandemic average vacancy rate for this time of year was 6.6%.
• The rental vacancy rate is now up 0.3ppts from last year.
• Rental vacancy rates are lower, on a quarterly basis, in 20 major metro areas. The largest quarterly drops in the rental vacancy were in Memphis (-5.8ppts), Virginia Beach (-5.6ppts), Baltimore (-5.5ppts), Cincinnati (-4.6ppts), and Richmond (-3.6ppts).
• Rental vacancy rates are higher, on a quarterly basis, in 29 major metro areas. The largest quarterly increases in the rental vacancy were in Kansas City (7.8ppts), Indianapolis (5.6ppts), Jacksonville (4.6ppts), Buffalo (4.6ppts), and Cleveland (4.3ppts).
• Rental vacancy rates are highest in Birmingham (14.7%), Kansas City (12.9%), Buffalo (12.6%), Orlando (12.5%), and Memphis (11.6%).