(NEXSTAR) – Slowing apartment construction and surging demand for rental units have allowed landlords to raise their asking prices, especially in 10 major metro areas, according to a new report from Redfin.
Data from the St. Louis Fed shows that the new construction of privately-owned multi-unit buildings peaked in October of 2023, and has fallen steadily ever since. According to Redfin, that equated to a 45% drop in the number of new apartments being added to the market since the pandemic-era construction wave.
“Apartment construction boomed during the pandemic, but many of those projects have since wrapped up and fewer new ones are breaking ground,” said Redfin Senior Economist Sheharyar Bokhari in the report. “Builders are pumping the brakes due to high financing costs, elevated construction expenses and weaker investor appetite. With fewer new apartments coming on the market, renters have fewer options to choose from and landlords are regaining the ability to raise prices.”
As of September 10, the average rent in the U.S. for all property types was $2,088, according to Zillow.
In the greater Chicago area and in California’s Silicon Valley, the two areas with the highest jumps since August of 2024, asking rent shot up over 10%, Redfin found.
See the metro areas with the greatest year-over-year rent increases below:
Asking rent prices went up just about everywhere since August 2024, with three notable exceptions. The average cost of rent actually went down in three metro areas, the study found: Austin-Round Rock-Georgetown in Texas, Louisville/Jefferson County in Kentucky, and Jacksonville, Florida.
Short-term numbers aren’t much better for prospective renters.
Inflation heated up in August, and asking rent prices grew the most since 2022, the third straight month of year-over-year increases.
The data showed that the average asking price for 0-1 bedroom units rose the most nationwide (4.4%), followed by 2 bedroom apartments (3.6%). Rent prices for 3+ bedrooms remained flat, the study found.
The metros with the biggest monthly increases, according to Redfin, were: Pittsburgh (2.6%), Cincinnati (2.3%), Portland-Vancouver-Hillsboro in Oregon/Washington (2.1%), and Baltimore-Columbia-Towson in Maryland (2%).
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