Rent in the U.S. has been growing at a shocking rate thanks to housing shortages.
The median rental asking price is now $2,000, a record high, according to Redfin real estate. While rent prices are higher in metropolitan areas, it has increased across the board.
Like the housing market, rentals are in short supply. As renters returned to the cities following the pandemic, housing shortages followed. Mortgage rates rose too high for some buyers, creating more need for rentals, Bloomberg reports.
A shortage of units has resulted in landlords increasing prices.
Rent prices in Austin, Texas, rose 48% in the last year. Nashville, Tennessee, Seattle, Washington, and Cincinnati, Ohio, all rose 32%. Only Milwaukee, Wisconsin, Kansas City, Missouri, and Minneapolis, Minnesota, saw rents decline.
The average national rent grew 9.4%. Though rent is at an all time high, it grew more slowly this quarter than it has in the past few months, reports The Wall Street Journal.
Demand for apartments could also start slowing. The U.S. apartment vacancy is at 3.7%, an increase from 3.5% a year ago.
With a slight dip in demand, rental prices could potentially decrease, but they’re still higher than many renters can afford.
For those looking to buy homes, inventory may start to increase.
Higher mortgage rates have made fewer buyers eligible for new homes, meaning more home buyers have backed out of deals.
Saratoga Homes salesman Kevin Brown told Bloomberg that his company is working on 55 houses right now, all without deals.
Developers broke ground on 982,000 single-family homes in June, a 19% decrease since February 2022 and 16% decrease since June 2021, Forbes reports.
In June, the housing market was still hot with the highest supply of new homes compared to sales since 2010. Then in July, buyer interest dropped to the lowest numbers since 2012, Bloomberg reported.