For the first time since November 2021, the U.S. median monthly rent failed to set a new record, falling slightly from the previous month — down $10 to $1,771 in August, according to a report from Realtor.com on rental conditions.
But renters, don’t breathe a sigh of relief just yet.
While the pace of year-over-year rent increases appears to be slowing — last month marked the first time of single-digit annual rent growth in 13 months, as well as the first slide in asking median rents since last November — renters are still there. Struggling with higher than normal housing costs.
In the 50 metropolitan areas surveyed by Realtor.com, average rent growth for 0-2 bedrooms slowed to 9.8% annually, but rents still tripled pre-pandemic levels.
The power of wage increases achieved during the tight labor market has been eroded by inflation that has not been seen in decades. Meanwhile, credit card balances are increasing and personal savings rates are decreasing.
Renters earning a typical household income were putting down 26.4% of their money for housing in August, compared with 25.7% a year earlier, Realtor.com reports. That means they’re getting closer to a common level of affordability: spending no more than 30% of a person’s monthly income on rent.
“Our analysis highlights the rental affordability challenges facing many Americans today. Realtor.com Chief Economist Danielle Hale said in a statement that rents are significantly higher than in previous years and are taking a higher percentage of incomes, which are growing at a slower pace than inflation.
(Realtor.com is operated by News Corporation NWSA;
subsidiary Move Inc., and MarketWatch is a division of Dow Jones, which is a subsidiary of News Corp.).
A handful of cities also went beyond accommodating the 30% rule. Of the nation’s top 50 metros, 9 had rents above 30% of median household income in August, according to Realtor.com. In extreme cases, renter households in Miami with a typical household income can expect to put 46.5% of their monthly income toward standard rent, with an average price of $2,626.
“There are still some bright spots for renters,” Hale said in a statement. “Under the general rule of keeping housing costs below 30% of your salary, renters were able to follow best practices in most major metros in August.”
“Furthermore, as rental growth slowed, national rents did not set a new record for the first time in nine months,” she added. “If these trends and the usual seasonal cold continue, renters may be able to keep housing costs within a relatively manageable budget in the coming months.”