According to a new monthly report from Redfin the median U.S. asking rent rose 2.2% year-over-year to $1,981 in February, the largest gain recorded since last January 2023, and in increase of 0.9% from a month earlier.
Asking rents hit a low point last February, which is one reason for the sizeable year-over-year increase this February; mortgage rates also played a part in this.
“Mortgage rates ticked back up in February—a disappointing development for prospective homebuyers, who just a few months ago got a glimmer of hope as rates finally started to fall,” said Redfin Chief Economist Daryl Fairweather. “With rates still elevated, many are opting to continue renting, which is buoying rental demand, and as a result, rent prices.”
It is worth noting that the Federal Reserve is expected to lower interest rates before the end of the year, but how soon that happens is up in the air. Comments to Congress from Federal Reserve Chairman Jerome Powell two weeks ago indicated that rate drops may not occur until closer to the end of the year. This could turn more renters into buyers and in renters may get lower rates.
While rents in February were relatively stable compared to the last two years, for the majority of 2022, growth in asking rents slowed but rapidly increased during the pandemic surge and in 2023 asking rents actually declined on a year-over-year basis.
The median asking rent in February was $73 below (-3.5%) the record high set in August 2022 (rents often peak in the summer and trough in the winter), but was still $387 higher (+24.3%) than it was in February 2020—the month before the coronavirus was declared a pandemic and a moving frenzy started driving up rents. That means affordability remains strained for many U.S. renters.
Median rents based on geographic location:
- The median asking rent in the Northeast jumped 5.2% year over year to $2,481 in February—the largest gain in nine months. Rents in the Midwest saw a similar increase, rising 4.9% to $1,441—the biggest increase in five months. Meanwhile, asking rents in the South and West were essentially flat, rising 0.3% to $1,635 and falling 0.1% to $2,349, respectively.
- The Northeast and West have been nearly tied for the most expensive rental region for much of recent history, but switched spots over the last year; the West was the priciest region for much of the pandemic homebuying frenzy, but the Northeast reclaimed the top spot in November 2022 and has held it ever since.
- Rents are likely holding up best in the Northeast and Midwest because those regions haven’t been building as much as the South and West, meaning landlords aren’t under as much pressure to fill vacancies.
Click here to view the full report, including charts and methodology.
