Rent Is Expected to Keep Climbing in 2023, but Just How High Will It Go?
Median rent in the nation’s 50 largest cities fell by $10 last month, the first price drop recorded since November, and while that slight deceleration is being celebrated by renters across the country, the long term rental outlook isn’t as optimistic, CNBC reports. Rent price growth will remain elevated into 2023, and some economists are even forecasting above-average gains as the Fed continues to raise interest rates to fight inflation in the housing market.
Elevated housing costs will likely keep a large share of would-be homebuyers in the rental market, and that increased demand paired with a chronic housing shortage will pose affordability challenges for months to come.
But a one-month decline in prices isn’t necessarily the start of a long-term trend. In fact, rent price growth will likely remain elevated well into 2023, says Realtor.com’s chief economist, Danielle Hale. “My expectation is that rent growth will slow, but we may not see it go back to what was typical before the pandemic,” she says.
Year-over-year rental price growth will rise from 5.8%, as of June 2022, to 8.4% as of May 2023, according to a Federal Reserve Bank of Dallas forecast that uses data from the federal government’s consumer price index.