Rental prices that soared to record highs just a few months ago are now heading in the other direction as inflation, economic uncertainty and falling demand have finally caught up with the market.

                By                    Vance Cariaga

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In September, the national median rental price fell by 0.2% on a month-over-month basis, according to the latest National Rent Report from Apartment List. That’s consistent with the usual pre-COVID seasonal trend and likely means rents will keep falling in the coming months as the winter slow season begins. Year-over-year, rents were up 7.6% in September.

But even though it’s not unusual for rental prices to slow after the summer, trends show that the market is continuing to weaken from its white-hot pace earlier in the year. As recently as June, the median listed rent for an apartment in the U.S. rose above $2,000 a month for the first time, NPR reported, citing data from Redfin.

But the median rent in September — the amount tenants actually paid — was $1,759 a month, according to a separate report from Realtor.com released earlier this month. That represented a 7.8% gain from the prior year — the lowest annual increase since June 2021. September was also the second month in the last eight that month-over-month rental prices declined.

“After more than a year of double-digit yearly rent gains and nearly as many months of record-high rents, it’s especially important to see consistency before we confirm a major shift like the recent rental market cooldown. But September data provides that evidence, as national rents continued to pull back from their latest all-time high registered just two months ago,” Realtor.com Chief Economist Danielle Hale said in a statement. “We expect rent growth to keep slowing in the months ahead, partly driven by the impact of inflation on renters’ budgets.”

She added that it is “unlikely” rents will return to a more normal pre-COVID pace of growth for at least another year, “when available rental inventory starts to reflect the recent uptick in multifamily new construction.”

The Apartment List report noted that the cooldown in rent growth is “being mirrored by continued easing on the supply side of the market.” Its vacancy index now stands at 5.2% following nearly a year of gradual increases from a low of 4.1% last fall.

Month-over-month, September rents declined in 69 of the nation’s 100 largest cities, Apartment List said. Eight other cities saw flat month-over-month rent growth. In 93 of the top 100 cities, rent growth during the first nine months of 2022 was slower than it was over the same time period in 2021.

One reason demand is slowing is that young people who otherwise might be looking for a place of their own are instead opting to stay with their parents, Bloomberg reported. For that, you can blame rents that have risen so high that they’ve priced many people out of the market.

An analysis from Zillow found that the average American would have had to put in more than 64 hours of work in September to pay the typical monthly rent.

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“Rent became unaffordable for people in lots of markets,” Jeff Tucker, a senior economist at Zillow, told Bloomberg. “We shouldn’t be surprised that fewer people will go out and sign a lease. Throw on other inflationary challenges and that’s going to shrink rental demand.”