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In the United States, rent is decreasing for the first time in years.

Good news for people who lease property: According to a research by Realtor.com that was published on Monday, the median rent in the United States dropped in May compared to May 2022. This marked the first annual rent reduction in at least three years.

The nationwide median rental price in May was $1,739. This is $3 more than in April but $0.5 less than in May 2022. Since Realtor.com began keeping track of year-over-year data in March 2020, this is the first time annual sales have decreased.

Even while we might not notice this trend in official measurements until next year, this is yet another indication that rental-driven inflation is probably in the rearview mirror, according to Realtor.com’s top economist Danielle Hale. While the decrease in rent is minor at best, it comes at a time when inflation is slowing and the employment market is holding steady, both of which are good signs for families.

Rents have decreased from a record of $1,777 in July 2022, but they are still roughly 25% higher than in 2019.

Rent increases began in 2021 and continued through the middle of the previous year as people flocked back to metropolitan centers for in-person employment and education, following a period of “pandemic pricing” that lasted for much of 2020. Because of the high cost of homeownership and the general shortage of housing, many people who otherwise would have purchased a home choose instead to continue renting.

Although the market is trending in a more favorable direction for renters, Hale acknowledges that there may be some sticker shock for those who have been waiting.

In a follow-up interview, Hale stated that renters who may have remained in their current location for the past couple of years and haven’t relocated may not be paying market rent. Even though market rents are falling, they may have to pay more if they relocate this year.

In May, rents fell by 3% and 0.7% annually in the West and South, respectively, while they continued to rise in the Midwest and Northeast. Reasons for this include low unemployment rates and continued low housing prices in Midwest urban regions. Renting is becoming more popular in the Northeast because of the region’s robust job economy, according to Hale.

Columbus, Ohio (9.3%), St. Louis, Missouri (7.7%), and Cincinnati, Ohio (7.7%), are the metro regions with the highest rent increases year over year. Las Vegas (-6%), the Riverside and San Bernardino area of California (-5.9%), and Phoenix (-5.7%) have seen the highest year-over-year decreases.

According to Hale, rents will remain flat through the end of the year and into 2019. Hale argues that the historic levels of multifamily construction activity now underway will contribute to these price decreases.

The national inflation gauges, especially the Consumer Price Index, may be slow to reflect this cooling. Due to the infrequency of data collection (and the similarly infrequent frequency with which rents vary in leases), shelter, which is essentially a measurement of rental leases as the implicit rental value of owner-occupied homes, carries a lot of weight in the CPI calculations but comes with a big lag.

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