Asking rents have fallen nearly 5% since 2022, but prices could start rebounding soon, Redfin says

• Asking rent prices have fallen almost 5% since 2022, but prices could soon rise as the post-pandemic housing boom slows, according to Redfin. Developers are struggling to fill newly built apartments as more than half sit empty three months after completion.

Asking rents have fallen in the last three years, but prices could begin to rise soon, Redfin says. 

Median asking rents in the U.S. were $1,625 in April, down 5% from the record high of $1,705 set in August 2022. 

Month over month, median asking rent rose 1.2%, typical for that time of year, but fell 1% from a year ago, the largest decline in 14 months as a result of a lopsided supply and demand.

“Asking rents are sluggish because there are more apartments for rent than people who want to rent them,” Redfin Senior Economist Sheharyar Bokhari said in a statement on Monday. “Renter demand is strong, but growth in apartment supply is even stronger because multifamily construction surged in the wake of the pandemic moving frenzy. Permits to build apartments have started to taper off, though, so asking rents could rebound in the coming months.”

In fact, data out on Friday further confirmed that trend. Building permits in April for housing with five or more units slumped 3.2% from a year ago and decreased 4.7% from March, according to U.S. Census data.

That comes after a building boom that added millions of new units. The seasonally adjusted annual rate of housing completions was at 1.46 million in April, slowing from 1.76 million in August 2024, but still well above the May 2020 pace of 1.17 million, according to U.S. Census data compiled by the St. Louis Fed.

Across the country, the supply overhang and less robust demand are contributing to a 5.1% increase year over year in new listings and a 14.3% bump in the total number of homes for sale, according to a different Redfin report.

As more units have hit the market in recent years, the number of renters hasn’t kept up and newly built homes and apartment complexes are struggling to match the stream of supply with demand.

During the first quarter, the vacancy rate in buildings with one unit grew from 6.1% in the final quarter of last year to 6.3%, and buildings with two or more units edged upward from 7.5% to 7.7%, according to U.S. Census data. Buildings with five or more units remain 8.2% vacant, the same as the previous quarter. 

Additionally, 47% of newly built apartments in the third quarter of 2024 were rented within three months of completion, according to a different Redfin analysis of the U.S. Census data. That’s tied for the lowest percentage on record dating back to 2012, aside from the fourth quarter of 2023 and the start of the pandemic. 

While asking rent costs are down across the nation, Austin, Texas, led the retreat with a nearly 10% decline year over year down to an average of $1,399 last month.

“Many people in Austin are finding that it’s a lot cheaper to rent than buy,” Austin real estate agent Andrew Vallejo said. “You could buy a home and have a monthly mortgage payment of $3,200, but the same home will rent for $1,900. Unless the buyer has a good amount of money for a down payment, renting is way less expensive.”

Other cities witnessing a decline in rent include Minneapolis (-7.3%), Portland, Ore. (-5.3%), Raleigh, N.C. (-5.2%), San Diego (-5.2%), and Jacksonville, Fla., (-5.2%).

As high median housing prices and elevated mortgage rates continue to weigh on the housing market, some cities across the country are seeing rent increases.

Asking rent prices increased the most in Cincinnati (8.7%), Pittsburgh (7.5%), Baltimore (5.9%), Birmingham, Ala. (5.8%), and Washington, D.C. (5.2%).

This story was originally featured on Fortune.com