U.S. apartment affordability is on the rise as stable rents and increased wage growth create a more favorable rental market. In August, U.S. apartment rents saw a modest 0.9% year-over-year increase, the largest in 18 months, while a surge in multifamily construction has kept rents relatively stable.

Key Takeaways

• Stable Rents and Wage Growth: A combination of stable rents and a 3.8% wage growth has improved rental affordability across many regions.
• Regional Variations: Cities like Austin experienced significant rent drops (-17.6%), whereas Virginia Beach saw the highest rent growth (+15.2%).

By the Numbers

According to a Redfin report, August’s apartment rents increased by 0.9%, reaching a median of $1,645. Despite this rise, rents remain below their peak of $1,700 from two years ago. Coupled with a 3.8% wage growth, this has made renting more affordable in several key areas.

Nationally, the combination of stable rents and wage growth has enhanced apartment affordability. The report highlighted that median rents for two-bedroom apartments remained unchanged at $1,725 year-over-year, while smaller units saw only slight increases.

Construction Stabilizes Rents

The historic high in multifamily building completions in 2024 has led to supply outpacing demand in some areas, resulting in rent reductions and concessions. This construction boom has notably impacted Sun Belt states, where stable or declining rents are becoming more common. For instance, Austin saw a 17.6% year-over-year rent drop in August, the steepest decline among the 33 major metros analyzed by Redfin.

Rents Rise in Select Markets

Not all regions experienced rent declines. Virginia Beach reported the steepest rent increase, up 15.2% in August. Other cities like Washington, D.C., Baltimore, Chicago, and Cincinnati also saw notable rent hikes, contrasting with the overall national trend of increased affordability.

Despite some market variability, multifamily rents are expected to remain stable in the near term as the new construction backlog continues to supply apartments across the country.