The latest statistics for US rental prices bring good news for owners of buy-to-let properties, but little respite for tenants. Realtor.com data reveals that monthly rents soared by 15.5% in the year to May, bringing the median rental to its highest ever. However, the underlying trend is slowing down and analysts believe that future rental growth will be more moderate.
Highest rental rates ever
In May, the average US rental price reached US$1,849. The figure is the highest ever and marks the 15th month in a row of record increases. Furthermore, it represents a 15.5% uptick compared to May last year and a giant surge of 23.3% since May 2020.
Rents have been steadily rising since late 2020 but began to skyrocket from April last year. However, rates have recently started to temper and the underlying trend has now dipped from its all-time high increase of 17% earlier this year.
Studios highest rental hike
Of the three types of property included in the Realtor.com research, studio apartments experienced the biggest price increases in rent. They rose by 16.9% in the year to May.
One-bedroom properties saw a 15.2% increase, bringing their average rent to US$1,708 a month. While monthly rent for two-bedroom homes rose by 14.8% to reach US$2,076.
Low vacancy rates across the US
Vacancy levels illustrate the current high demand for rental properties. Realtor.com finds that the overall vacancy rate for urban properties stands at just 5.8% nationwide, down from 7.3% a year ago. Rural properties have also experienced a surge in demand and just 6.7% of the market was available for rent in May.
The data shows a plummet in vacancy rates in certain states, particularly those in the Sun Belt. Relocation trends since the start of the pandemic have moved many Americans to states like Florida and Texas. As a result, vacancy rates have seen “a sharp dive in the South”, says Realtor.com.
Highest and lowest availability
Vacancy levels tend to correlate with US rental prices with greater availability in metros with lower occupancy. In May, Indianapolis had the highest vacancy rate in the country at 10.6%. Pittsburgh stood in second place with 10.6%. Rental rates in Indianapolis were US$1,275, almost a third cheaper than the national average.
At the other end of the scale, Riverside in California and Boston had the lowest supply of rental units. Their vacancy rates stood at just 1.8% and 2.4%, respectively. Both, however, had some of the highest rents in the country. The average monthly rate in Boston, for example, was US$2,889.
Rental rates in Florida
Like the rest of the country, Florida rental rates also experienced another hike in May. Of the four largest metros, Miami posted the biggest surge with an increase of 45.77%. The latest rise brought average rents in the city to US$2,843, some of the most expensive rental prices in the US.
Orlando rentals also saw a big increase in May when monthly rent rose by 28.37% to reach an average of US$1,935. In Tampa, rental properties cost US$2,093 to rent a month after a 22.37% increase and in Jacksonville, rents went up by 18%, to US$1,593.