Rents decline nationwide but remain high in key markets

Dan Seiffert SVP, Accounting | realtors.com

Prices for just about everything seem to be increasing, but one bright spot is that rents have declined annually for the past 13 months in a row.

The median asking rent in the 50 largest metros for August was $1,753, which is $5 less than what renters paid in August 2023, according to a new Realtor.com® report.

The average rent for a two-bedroom apartment in August was $1,941, down $5 year over year; a one-bedroom apartment was $1,632, down $11; and a studio was $1,455, down $20.

One way to measure rental affordability is the 30% rule of thumb. According to Realtor.com economist Jiayi Xu: “a household should spend no more than 30% of its gross income on housing costs.”

The average median monthly household income among the top 50 metros so far in 2024 is $6,985, and the monthly median listed rent was $1,753 in August. That means the average U.S. household spends 25.1% of their paycheck on rent. That’s down from 25.9% in August 2023. "For the median household," Xu explains, "the nation’s rental affordability has improved over the past year as rent prices have dipped and typical incomes have grown."

As long as the trend of year-over-year rental declines persists, Xu says we can anticipate ongoing improvement in rental affordability over the course of the year.

However, while rental affordability is improving nationally, certain cities remain unaffordable. The U.S. Department of Housing and Urban Development defines “cost-burdened households” as those paying more than 30% of gross income on housing. Renters in six of the top 50 metros fit into that category.

The least affordable rental market was Miami, FL, where renters with a typical household income spent an average of $2,388—or 40.8% of their monthly paycheck—on rent in August 2024.

Here are the other five cities where renters pay over 30% of their median income on rent:

- Los Angeles, CA: Average rent of $2,885 and a rent-to-income share of 38.7%.

- New York City: Average rent of $2,935 and a rent-to-income share of 38.1%.

- San Diego: Average rent of $2,847 and a rent-to-income share of 35%.

- Boston: Average rent of $3,022 and a rent-to-income share of 33.6%.

- Riverside: Average rent of $2,176 and a rent-to-income share of 31.2%.

Renters searching for more affordable options might consider Oklahoma City which had an average rent there at just $1,040 per month making it the most affordable rental market in August 2024.

“Specifically,” says Xu,“families looking to rent with a typical household income in Oklahoma City would spend only about18.2%of their monthly paycheck on typical rentals.”

Here are five other cities where renters pay the lowest share:

- Columbus: Average rents at$1231witha18point9percentrenttoincomeshare.

- Austin:Average rentsat1535witha19point5percentrenttoincomeshare.

- Minneapolis:Averagerentsat1557witha19point8percentrenttoincomeshare.

-KansasCity:Averagerentsat1357witha20point2percentrenttoincomeshare.

Indianapolis:Averagerentsat1324witha20point7percentrenttoincomeshare.

While rental prices are down from last year they’re still up since COVID19 pandemic.InAugust,renterspaidanaverageof293moredollarspermonththantheydidin2019thatsan20pointonepercentincreasebutitsroughlyonparwhathasoccurredinoverallconsumerpriceswhichwentup22 point seven percentinthepastfiveyears.Onaverage,two bedroomunitswereupby345dollars(21 point six percent)onebedroomunitswereupby251dollars(18 point two percent)andstudioswereupby179dollars(14 point zero percent)sinceAugust2019.Althoughthat’sabigjump,Xusaysitstillpales incomparisonwiththe51 point zeropercentincreaseinthemedianpricepersquarefootofforsalehomelistingsinthepastfiveyearsendingJuly2024