In a significant shift for the rental market, asking rents for new apartments have fallen 6.2% in the second quarter of 2024, bringing prices down to their lowest point since 2022. This decline is primarily driven by a surge in newly completed apartment buildings, which has flooded the market with available units and created more competition among property owners to secure tenants.
New Construction Boom Fuels Rental Decline
The rise in new apartment completions has been a key factor in the drop in asking rents for new apartments. According to a report by Redfin, apartment completions increased by 18.7% year over year in the first quarter of 2024, the highest level seen in over a decade. With more units available, landlords are being forced to reduce rents and offer additional concessions like free parking or discounted first months to attract renters.
For instance, in markets like Dallas and Nashville—cities experiencing a construction boom—rents are dropping as supply outpaces demand. This trend is echoed in cities like Austin, where overall rents, including those for newly built units, dropped 17.6% in August year over year.
One-Bedroom Apartments See Steepest Decline
Among the different types of apartments, asking rents for new apartments with one bedroom have experienced the steepest decline, falling by 9% year over year to an average of $1,566. Two-bedroom units also saw a decline, dropping by 4.5% to $1,934. Meanwhile, three-bedroom apartments fell 3% to $2,309.
However, studio apartments bucked this trend slightly, with asking rents rising by 0.9% to $1,617. Due to the lower volume of newly built studio apartments, which are often located in pricier urban areas, their prices tend to fluctuate more.
What Renters Can Expect
With the continued construction of new apartments, asking rents for new apartments are expected to drop further in 2024. Redfin Senior Economist Sheharyar Bokhari noted, “Rents for new apartments will likely fall a little more this year, because there are still a ton of new buildings being completed.”
For renters, especially in markets experiencing significant development, there may be opportunities to take advantage of lower prices and concessions as landlords strive to fill their units. Cities like Austin, Dallas, and Nashville are prime examples where this dynamic is playing out.
Asking Rents for New Apartments Drop 6%
The 6.2% drop in asking rents for new apartments marks a notable shift in the rental market, driven by a surge in new construction. As more apartment buildings are completed and competition for tenants increases, renters may continue to benefit from lower rents and incentives. According to Redfin’s analysis, the trend is likely to persist as the construction boom continues through the remainder of the year.
