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Rental prices for one- and two-bedroom apartments rose in March for the first time in six months.
The monthly cost of a one-bedroom apartment in the United States rose to $1,487, an increase of 0.3% from February. The price of a typical two-bedroom apartment also rose 0.5% to $1,847, according to a new report by Zumper, a real estate data site.
While prices rose overall, some metropolitan areas saw declines. For example, the rental price for a one-bedroom apartment in Baltimore, Maryland, is $1,390, down 0.7% from a year ago, according to Zumper.
Arizona is unique, with rent reductions in all major metropolitan areas evaluated. Statewide, the median price of one-bedroom apartments fell to $1,311 in March, down about 4% from $1,365 a year ago, according to Zumper data.
Experts say the slight increase in prices in the broader rental market may be a reflection of old seasonal patterns.
“It's expected,” said Zumper spokeswoman Crystal Chen. “When we get into the warmer months, that's when demand increases.”
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“During the coldest months of the year…the rental market tends to be cold,” said Jacob Channel, senior economist at LendingTree. “As we head into summer, we're starting to see rental prices increase in more places.”
However, some fundamental factors such as supply and demand may also be reflected, said Susan M. Wachter, a professor of real estate and finance at the Wharton School of the University of Pennsylvania.
Why Arizona prices are falling
Some markets in the country are cooling more than others. Prices in the Sun Belt and intermountain areas are falling, and Arizona is a good example, Chen said. Zumper defines the intermountain region as Arizona, Nevada and Colorado.
“All of the Arizona cities in our report had stable or declining rates year over year,” he said.
The city of Glendale, for example, had the biggest drop in rents, with prices for one-bedroom rooms down more than 10% from this time last year.
Arizona has a large supply available, which keeps rental prices low in the area, Wachter explained.
“In the data, there is some evidence of fundamentals at play, in addition to seasonality,” he said.
Phoenix is expected to add more than 33,000 new available units this year, and many buildings in the state are offering concessions, such as waiving deposits or application fees and up to two months of free rent, Zumper found.
“If you're in that market, it's a good time for renters to get an amenity-rich apartment that otherwise would have been out of reach,” Chen said.
Supply influences rental prices elsewhere
While supply is expected to increase in the Sun Belt and intermountain region, many markets in the Midwest and Northeast are undersupplied, causing rental prices to rise.
“The supply available absolutely varies by market,” Wachter said.
Rental prices for one-bedroom apartments have increased 25% in New York City from a year ago, according to Zumper. Rental costs and high competition also affect areas such as Columbus, Ohio and Norfolk, Virginia.
However, while prices have increased, they have decreased significantly from a year ago and even more so compared to the market volatility of 2021 and 2022, when pent-up demand kept prices high.
“Rental prices are going up and they're expensive, but they're not suddenly skyrocketing again,” Channel said.
“We don't expect to see any increase in national rates like in 2021 and 2022,” Chen said. “Seasonality returns after two crazy years.”
While many factors affect housing affordability in the United States, the main one, in simpler terms, is tight supply, Channel said.
“The more rental units that are built, the prices are likely to go down, and I think Arizona demonstrates that very well,” he said.
