A recent report from Redfin highlights a slowdown in apartment construction, following a surge in demand that enabled landlords to raise rental prices, particularly in the ten major metro areas.
Data from the St. Louis Federal Government indicates that new construction of privately owned multi-unit buildings peaked in October 2023 and has been declining since then. This results in a 45% drop in the number of new apartments entering the market, compared to the peak construction period during the pandemic.
“Although apartment construction soared during the pandemic, many projects are winding down, and fewer new ones are beginning,” noted a senior economist at Redfin. The economist added, “Developers are hesitant due to high financing costs, increasing construction expenses, and decreased investor interest. With fewer apartments available, tenants have limited options, allowing landlords to increase their rental prices.”
As of mid-September, the average rent for various property types across the U.S. stood at $2,088, based on information from Zillow.
Particularly in the Greater Chicago area and Silicon Valley, rental prices have increased by over 10% since August 2024, according to the report.
In fact, a closer look at some regions shows significant rental hikes compared to last year. Here’s an overview:
| Core-based statistics area | Median rent search | Changes in median rent findings compared to the previous year |
| Chicago Naperville Elgin, IL-WI | $2,275 | 10.7% |
| San Jose Sunnyvale Santa Clara, CA | $3,605 | 10.6% |
| Philadelphia Camden Wilmington, PA-NJ-DE-MD | $2,034 | 9.9% |
| Pittsburgh, PA | $1,739 | 9.8% |
| Washington, Arlington, Alexandria, DC-VA-MD-WV | $2,414 | 8.7% |
| Boston Cambridge Newton, MA | $3,121 | 8.0% |
| Baltimore Columbia Towson, MD | $1,879 | 7.4% |
| San Francisco Oakland, CA – Berkeley | $3,000 | 6.9% |
| Seattle Tacoma Bell Review, WA | $2,144 | 6.3% |
| Providence Warwick, RI-MA | $2,354 | 6.0% |
Interestingly, there are three notable exceptions where rent prices have actually decreased since August 2024: Rock Georgetown, Austin Round (Texas), Louisville/Jefferson County (Kentucky), and Jacksonville (Florida).
The outlook for prospective tenants doesn’t seem very promising in the short term.
Inflation has increased, with asking rent prices seeing their most significant rise since 2022, marking three consecutive months of increase.
Data has shown that the average asking price for 0-1 bedroom units saw the largest hike (4.4%), followed closely by two-bedroom apartments (3.6%). Meanwhile, rental prices for units with more than three bedrooms have remained stable, as per the findings.
Redfin also reported that the cities with the highest monthly rent increases included Pittsburgh (2.6%), Cincinnati (2.3%), Portland-Vancouver Hillsboro (2.1%), and Baltimore-Columbia Towson (2%).
