The median U.S. rent rose 4.7% in October to $1,734, the slowest annual gain posted in 18 months, according to CNBC. Though rates are still historically high, double-digit rent growth is beginning to cool nationwide after reaching unsustainable levels at the height of the pandemic. Year-over-year rent growth has been slowing for nine consecutive months and has been in the single digits for the past three months, but strong demand from priced-out homebuyers could prevent prices from slipping in the near future.
Developer confidence in the multifamily housing market fell sharply in the third quarter of this year, and NAHB anticipates significant declines in new multifamily construction in 2023.
“High mortgage interest rates may be causing potential homebuyers to hit pause and remain renters, keeping pressure on rent prices,” said Molly Boesel, principal economist at CoreLogic. “However, the monthly rent change was negative in September, resuming the typical seasonal pattern for the first time since 2019, which could signal the beginning of rent price growth normalization.”