SANTA CLARA, Calif., June 16, 2021 /PRNewswire/ -- With vaccination rates rising and many U.S. businesses beginning to scale back their remote work policies, the U.S. median rental price hit the highest point in two years in May, surpassing pre-pandemic growth at an increase of 5.5% year-over-year, according to the Realtor.com® Monthly Rental Report released today.
Nationally, the U.S. median rent was $1,527 per month in May. The median rent is now increasing faster than the 3.2% growth seen in March 2020 before the onset of COVID. In addition, one-bedroom and two-bedroom rentals reached new highs in May, while studio rents grew for the first time in ten months.
"Led by emerging tech markets and secondary cities, U.S. median rent prices reached the highest level seen in more than two years in May, surpassing pre-COVID levels. More than three-quarters of the 50 largest markets also hit this milestone, with rents climbing at an average pace of 9.1% year-over-year – nearly two-times the overall inflation rate of 5%," said Realtor.com® Chief Economist Danielle Hale. "Highlighting COVID's uneven impact across the U.S., rents continued to decline in the nation's largest metros like Los Angeles and Boston, where May prices were below prior peaks. However, some big cities, San Jose, are making big strides toward recovery, with rents on pace to see new highs later this year."
Smaller tech cities and alternative suburbs lead the national rebound
In May, the U.S. median rent was up 7.5% over the same time in 2019, a more normal period for market comparison. Recent surges have helped erase the slower rent growth that has taken place since March 2020. In 38 of the 50 largest U.S. markets, May rents reached the highest level since March 2019. In these markets, rents were climbing at an average pace of 9.1% year-over-year in May.
Riverside, Calif., Memphis, Tenn., Tampa, Fla., Phoenix and Sacramento, Calif. posted gains of more than 15% year-over-year in May. The median rent in Riverside was, up 19.2% year-over-year to $2,020 – higher than the national rent, but a relatively affordable alternative to nearby Los Angeles where the median rent was $2,581.
One-bedroom and two-bedroom rents reach highest levels in two years
In May, one-bedroom and two-bedroom rents reached the highest levels since March 2019, at $1,718 and $1,422, respectively. With remote work driving the need for more space, two-bedroom rental prices continue to grow, rising an average of 8% year-over-year. Nationally, one-bedroom rents also saw sizable growth, up 5.8% year-over-year.
Studio rents saw their first positive growth (+1%) in 10 months, reaching a median rent price of $1,254. While studio rents have been experiencing declines throughout the pandemic, the May growth pace puts prices on track to reach a new milestone next month.
Big city rent declines soften year-over-year, shrinking the gap from pre-COVID peaks
Among the nation's 10 largest tech hubs, rent declines softened in May, declining just 2.3%, a significant improvement from the 6.6% decline seen earlier this year. Emerging tech hubs like Austin, Texas, and Denver continued to lead the rebound, with rents up 6.4% and 5.5% in May, respectively.
Rents remained below or at pre-COVID levels in some big cities that experienced significant pandemic-related disruption. Year-over-year rents were down 8.3% in San Francisco, 7.3% in San Jose and flat in New York. In these three markets, rents still need to grow an additional 9 to 12% to return to prior peak pricing.
With the gap shrinking between current and pre-COVID levels, price growth is beginning to return to more typical spring and summer seasonality – putting rents on track to reach new highs in the coming months.
May 2021 Rental Data - 50 Largest Metropolitan Areas
Median Monthly Rent
Atlanta-Sandy Springs-Roswell, Ga.
Austin-Round Rock, Texas
Buffalo-Cheektowaga-Niagara Falls, N.Y.
Dallas-Fort Worth-Arlington, Texas
Hartford-West Hartford-East Hartford, Conn.
Houston-The Woodlands-Sugar Land, Texas
Kansas City, Mo.-Kan.
Las Vegas-Henderson-Paradise, Nev.
Los Angeles-Long Beach-Anaheim, Calif.
Louisville/Jefferson County, Ky.-Ind.
Miami-Fort Lauderdale-West Palm Beach, Fla.
Milwaukee-Waukesha-West Allis, Wis.
Minneapolis-St. Paul-Bloomington, Minn.-Wis.
New Orleans-Metairie, La.
New York-Newark-Jersey City, N.Y.-N.J.-Pa.
Oklahoma City, Okla.
Riverside-San Bernardino-Ontario, Calif.
San Antonio-New Braunfels, Texas
San Diego-Carlsbad, Calif.
San Francisco-Oakland-Hayward, Calif.
San Jose-Sunnyvale-Santa Clara, Calif.
St. Louis, Mo.-Ill.
Tampa-St. Petersburg-Clearwater, Fla.
Virginia Beach-Norfolk-Newport News, Va.-N.C.
Rental data as of May 2021. Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, 1-bedroom, or 2-bedroom units. National rents were calculated by averaging the medians of the 50 largest metropolitan areas.
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