In a favorable trend for renters, Redfin reports slowing rent increases

Although rents continued to rise, Redfin reports the monthly annualized increase in December slowed. The median U.S. asking rent rose 4.8 percent year over year to $1,979 in December—the smallest increase since July 2021.

Rents grew at more than three times that pace one year earlier. December also marked the seventh straight month in which annual rent growth slowed and the fourth consecutive month of single-digit rent growth following nearly a year of double-digit increases.

Nationally rents fell 1.4 percent from a month earlier and were down 3.6 percent from the August peak of $2,053.

“Rents have room to fall. While they’ve cooled significantly from their peak, it still costs the typical renter 20 percent more to take on a new lease than it did two years ago,” Redfin Economics Research Lead Chen Zhao said. “An increase in the number of rentals on the market should also cause rents to ease in the coming months. Rental supply is growing due to an influx of construction in recent years, ebbing household formation, and a slow homebuying market, which is driving many homeowners to rent out their properties rather than sell.”

According to one Bay Area real estate agent would be sellers are turning to the rental market as sales prices are declining. That decline is increasing the stock of rentals.

“Some sellers are reluctant to drop their price, even when their home has been sitting on the market for a long time,” Josh Felder, a Redfin Bay Area real estate agent, said. “I’ve had two sellers recently decide to rent out their homes because they couldn’t get the price they wanted. Both homes were listed for over $2 million.”

In the Sacramento region, the year-over-year increase for December was slightly higher at 5.2 percent. In Minneapolis, the median asking rent declined 8.5 percent year-over-year in December, the largest drop among the 50 most populous U.S. metropolitan areas.