Rent prices in the U.S. have been declining for 19 consecutive months, with the median asking rent now at $1,691. Although renters are experiencing lower rent costs compared to last year, prices remain significantly higher than pre-pandemic levels. This drop has discouraged investments in multifamily housing, resulting in a significant decrease in new construction permits. Fewer than 294,000 units received permits in early 2024, the lowest since 2017. Economists warn this dwindling supply may lead to rising rents in the future as demand outstrips available units.
"This represents a major retreat in multifamily construction permitting, no doubt due to the fact that rents were falling year over year throughout 2024," says Berner.
"We expect rents to start to grow again in the coming years as the pace of new units hitting the market slows," warns Berner.
Even at the height of the pandemic in 2020, there were more units permitted, at 318,000. Now, fewer than 294,000 units are permitted, the lowest since 2017.
Americans are still paying much more for housing than they did before the COVID-19 pandemic, when the national rent was over 14% lower.
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