The Realtor.com May Rental Report found that renters are beginning to see some relief, with the median asking monthly rent in the 50 largest U.S. metros decreasing -0.5% year-over-year to $1,739. Nationally, rent prices increased $3 from last month, but were down $38 from the July 2022 peak. Realtor.com‘s 2023 Forecast Update predicts that rents will continue to drop, averaging -0.9% from 2022. In Metro Phoenix median rent prices for a 0- to 2-bedroom apartment averaged $1,663, a year-over-year drop of 5.7%. That was the third-biggest decrease in the U.S., trailing only the Las Vegas and Riverside, Calif., markets.

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“In May, we saw the first year-over-year decline in rents, a sea-change from the double-digit growth that renters contended with in much of 2021 and 2022. This is yet another sign that rental-driven inflation is likely behind us, even though we may not see this trend in official measures until next year,” said Realtor.com® Chief Economist Danielle Hale. “Although still modest, a decline in rents combined with cooling inflation and a still-strong job market is definitely welcome news for households.”

While rental declines are a positive sign for household affordability, it is important to note that rents are still $344 (+24.7%) higher than the same time in 2019, before the pandemic began.

“Despite the decline in typical asking rents, households who may not have moved in several years are likely to see their rent increase if they’re looking for a new home,” said Hale.

Western markets seeing biggest rent drops

Phoenix rent prices and rent prices in the expensive West are seeing the largest year-over-year declines (-3.0%), with the South close behind (-1.0%). More affordable Midwestern markets continued to increase (4.5%), but at a much slower pace than in previous months. Rents in the Northeast have stayed relatively strong, as low unemployment rates and relatively slow new construction improvements have kept demand high and supply limited. Densely populated markets like New York City (+6.8%) and Boston (+3.3%) have shown resilience.

Expectations for the second half of 2023

In some good news for renters, Realtor.com anticipates that rents will continue to drop, averaging -0.9% year-over-year in 2023. Strong multi-family new construction has helped to improve the availability of units, which is helping to improve prices. This, combined with a number of renters choosing to stay in their units longer in order to save money, will help to reduce rental market competition through the end of the year.

“Looking forward, we expect to see a continued, albeit small, year-over-year decline in rental prices throughout the remainder of the year. Renters may find themselves with more bargaining power and may have better luck finding an affordable unit this year. Meanwhile, landlords looking for help setting rents in a shifting market can find tools from Realtor.com‘s Avail,” said Hale.