Renters who are planning to move may need to reallocate money they’ve set aside for summer vacations.
Apartment prices rose 1.2% month-on-month in May, the fastest increase in nearly two years, according to real estate site Zumper’s latest rent report. One-bedroom rents haven’t risen this sharply since August 2022, while two-bedroom rents saw their biggest increase in 20 months.
May marked the second time in three months that monthly rents increased after remaining flat in April — not a big surprise, given that spring is a time when many people move.
Last month, one- and two-bedroom apartments settled at $1,504 and $1,865, respectively. One-bedroom units are the same price as they will be in May 2023, while two-bedroom units are 0.5% more expensive than a year ago.
Rents are also up significantly since the beginning of the pandemic, with one-bedroom apartments now costing $287 more than they did four years ago and two-bedrooms nearly $400 more.
“While annual rents have remained significantly more stable compared to the price increases experienced over the past few years, this has not yet offset the significant price increases, with national rents for one-bedroom apartments remaining exactly the same as a year ago and rents for two-bedroom apartments only $9 higher,” Zamper researchers wrote in the report.
An ominous sign of inflation
Accelerating rent increases won’t just affect tenants: Housing costs are a key component of inflation, so increases in apartment prices from the previous month could keep price growth at a high rate.
“This notable rent increase, combined with current persistent inflation, suggests further pressure on the CPI. [Consumer Price Index] “The coming months could see the Fed delay rate cuts further than previously expected,” Zamper CEO Anthemos Georgiades said in a statement accompanying the report.
These fears may seem overblown, as the April CPI report had predicted a decline in consumer prices. Investors learned on May 31 that the personal consumption expenditures (PCE) price index, another key inflation measure, had also fallen to 0.2%, also in line with expectations.
However, it’s worth noting that these inflation measures are lagging indicators, whereas Zumper’s rent data is current, and the company believes this data is useful for predicting the future.
25 cities where rents are falling
Nearly two-thirds of the top 100 US metro areas saw monthly rent increases in May, according to Zumper, but there were also a few places where rents remained roughly the same or even decreased compared to the previous month.
According to Zumper, the 25 US cities where rent for one-bedroom apartments has decreased since April are listed below. The report also includes monthly and yearly rent changes for each city, average rental prices, and a national rent ranking for the 100 largest markets in the country.
