March rents were down 1.7% on an annual basis, according to Apartment List.
That’s the largest drop since Apartment List began tracking in 2017and larger than the record set in the early months of the Covid pandemic.
Rents are falling because vacancies are also unusually high.
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox. Apartment rents usually rise in the spring months, as demand warms from the winter chill, but this year the gains are unusually small. The national median rent rose by just 0.4% in March from February to $1,363, according to Apartment List. Last year, the monthly increase was 0.6%. March rents were down 1.7% on an annual basis, the largest drop since Apartment List began tracking in 2017 and larger than the record set in the early months of the pandemic. The national median rent is now down 5.5% from its peak in 2022. “The latest data from the Bureau of Labor Statistics showed U.S. employers cutting jobs, and the war in Iran is pushing prices higher just as inflation was getting back under control,” wrote Chris Salviati, chief economist at Apartment List. “These factors have put many households in a state of heightened financial uncertainty, which consequently puts a damper on housing demand.” Last year at this time it looked like annual rent growth was going to flip into the positive for the first time since mid-2023, but that rebound stalled as the labor market weakened. Rents are falling because vacancies are also unusually high. The national rate in March was 7.3%, unchanged from February, but still the highest since 2017. There was a huge surge in the supply of new apartment units over the last three years. It peaked in 2024 but is still elevated and is now colliding with newly sluggish demand. In 2024, more than 600,000 new multifamily units hit the market, according to government reports, the most new supply in a single year since 1986. A separate report from Apartments.com, a CoStar company, showed regional disparities in rent growth in March from the year before. The Midwest recorded the strongest gain at 1.9%, followed by the Northeast at 1% and the Pacific at 0.7%. Rents fell year-over-year in the South, down 1.3%, and in the Mountain region, down 2.2%. “While apartment rent growth typically accelerates at this stage of the spring leasing season, gains in March remained modest, suggesting that early-season momentum is developing more gradually than in a typical year,” according to the Apartments.com report. As a result, apartment concessions have also risen to the highest level in over a decade. As of January, 16.6% of stabilized-apartment landlords were offering concessions in the form of either free rent or gift cards, according to RealPage Market Analytics. Among major metropolitan markets, Austin, Texas; Phoenix and Denver are seeing some of the steepest rent declines, while San Jose, California; San Francisco and Chicago are seeing the biggest gains, according to both Apartment List and Apartments.com.
