Rent prices tend to increase in spring and summer as more people seek new rental homes, but lower demand alongside new inventory keeps rent prices nearly flat nationally. In some states, however, an influx of new residents is causing median rents to grow, according to a May report from Rent.com. The trend is clear: People are moving to areas with strong economies that still have affordable rent and housing prices. In the states where rents are rising the fastest year-over-year, the median rent is still relatively low compared to the national median.
Nationally, rents were up just 0.29% year-over-year in April. The month-over-month decrease from March to April was -0.23%, following a 1.77% uptick from February’s low to March. The national median rent now sits at $1,967. Monthly declines have slowed, but that may be due to the season—there’s no telling whether the national median rent has ended its descent. In nearly 79% of markets, however, rents are still growing year-over-year. And in some Southern and Midwestern states, rents are rising at double-digit rates.
States with the Highest YoY Rent Growth
| State | Year-over-Year Rent Growth | Month-over-Month Change in Rent | Median Rent |
| South Dakota | +28.59% | +2.9% | $1,203 |
| Mississippi | +24.69% | +1.48% | $1,185 |
| Iowa | +16.76% | +2.35% | $1,126 |
| Arkansas | +14.47% | -0.62% | $1,018 |
| New Hampshire | +14.28% | -2.03% | $1,896 |
| North Dakota | +12.42% | -1.31% | $1,058 |
| Nebraska | +12.00% | +1.25% | $1,327 |
| Michigan | +9.72% | +0.99% | $1,369 |
| North Carolina | +9.38% | +0.22% | $1,658 |
| Indiana | +9.24% | +0.06% | $1,267 |
In all 10 states where rent prices are rising the fastest, the median rent is below the national median. Most states are in the South and Midwest, except for New Hampshire. South Dakota leads the pack with a near 29% year-over-year increase plus a 2.9% month-over-month increase. Housing costs and property taxes are rising more rapidly in the state than elsewhere, as cities like Sioux Falls draw new residents in droves.
States with the Largest YoY Decreases in Rent Prices
Only nine states saw year-over-year rent decreases across their cities. In many Mountain West states, rents are cooling years after an early pandemic migration boom. For example, Phoenix and Austin were both pandemic boomtowns and now rents are falling in those cities, which may be driving the downward trend for their respective states.
| State | Year-over-Year Rent Decrease | Month-over-Month Change in Rent | Median Rent |
| Idaho | -5.37% | -0.95% | $1,635 |
| Nevada | -4.78% | -0.10% | $1,568 |
| Arizona | -4.29% | -1.95% | $1,459 |
| Washington | -4.15% | +1.74% | $2,331 |
| Illinois | -2.21% | +1.81% | $1,835 |
| Texas | -1.75% | -0.9% | $1,446 |
| Kansas | -1.58% | +0.18% | $1,110 |
| Maryland | -0.67% | +0.36% | $1,883 |
| Oregon | -0.11% | -1.99% | $1,766 |
Notoriously high rents are flat year-over-year in California, while they’re up in Florida, New York, and Tennessee. While rent decreases year-over-year in only about 21% of markets, nearly 43% are down month-over-month.
Rent increases have cooled nationally due to an increase in the multi-family housing supply, coupled with recession fears that have curbed the demand for rental homes as more people stay put or move in with family or roommates. And that may continue, particularly if the U.S. economy falls into a recession. The rental market is just as uncertain as the housing market—although some investment firms are betting on a long-term rental boom in 2024 and eying build-to-rent developments as an attractive investment opportunity.
The Bottom Line
Rent prices have fluctuated since last fall but are just about flat year-over-year. Existing home sales have also been growing and shrinking, and uncertainty remains regarding the fate of the U.S. economy. The Fed could achieve a soft landing—or unemployment could rise, and housing prices could fall further. Investors need to use all the information available to them, including changes in rent prices, to make their best guess about how individual markets will fare. But they should also be prepared for all outcomes and enter into investment decisions with a backup plan.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.