June Asking Rents Posted Smallest Increase Since October as Landlords Respond to Falling Demand
After seeing record growth throughout the pandemic, the rental market appears to be losing steam as tenant budgets tighten amid fast-rising inflation, Redfin reports. Asking rents rose by just 0.7% in May, the smallest monthly gain posted since the start of the year, but some popular metros are still seeing double-digit increases. Cincinnati recorded the largest jump among the 50 most populous U.S. metropolitan areas in June with a 39% year-over-year gain in its median asking rent.
In comparison, just three of the 50 most populous metro areas saw rents decline year-over-year in June. Milwaukee, Minneapolis, and Kansas City saw rents fall by 12%, 7%, and 1%, respectively, and the same three metro areas reported rent drops in April and May as well.
“Rent growth is likely slowing because landlords are seeing demand start to ease as renters get pinched by inflation. With the cost of gas, food and other products soaring, renters have less money to spend on housing,” said Redfin chief economist Daryl Fairweather.
“To combat soaring rents, more cities should follow Minneapolis’ lead,” Fairweather explained. “Minneapolis eliminated single-family zoning in 2018, and last year got rid of a rule that required residential developers to include parking spaces. Now builders can replace parking spots with more housing units, which increases supply and therefore releases some upward pressure on rents.”