Rent prices posted their biggest decline in more than three years in May, with asking rents hitting $1,995, down 0.6% from a year ago, Insider reports. Rents are falling nationwide due to an increase in the total number of rental units, which is being partially caused by homeowners opting to rent out their properties instead of selling them.
In addition, multifamily construction is on the rise. The share of completed multifamily construction projects grew 24.2% year-over-year in April, and that surging supply, paired with weak rental demand, is causing rent prices to fall after years of unprecedented gains.
"Rents have cooled in part because the number of rentals on the market has grown, giving landlords less leeway to hike prices because they're grappling with a rise in vacancies as renters get more options to choose from," Redfin said.
This is partially as homeowners are electing to rent out their properties instead of selling them, given the recent surge in 30-year-fixed mortgage rates, according to the real estate data tracker.
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