Market update March 2024: Shift in hottest rental markets

Affordability, lifestyle preferences, and the evolving hybrid job market are redirecting rental demand. Tenants are looking away from the bustling Southern metros that thrived during the pandemic and towards smaller neighboring cities – or migrating to the Midwest.

• After seven months of incremental decline, the national median list price increased from $409,500 in January to $415,500 in February, according to Realtor.com. 

• The site also reports a 15% increase in newly listed homes – from 295,178 in January to 339,370 in February. Realtor.com highlights this as the start of a seasonal upturn, but even more noteworthy is the surge in affordable housing inventory (priced between $200,000 and $350,000). Supply climbed 20.6% compared to last February, offering homebuyers more options heading into spring. However, overall inventory remains limited compared to previous years.

• Zumper continues to report flat or negative monthly changes in the national median rent – one-bedrooms fell 0.9% to $1,482, while two-bedrooms dropped by 0.5% to $1,837.

• During the pandemic, the Sun Belt – especially Texas – went through a housing boom. Now, as more apartments come online in the region, prices are cooling off, with Austin and Dallas both dropping around 10% annually. This trend is further fueled by renters and buyers seeking affordability just outside major cities – more on that in our full article.

The dip in demand in these areas could also suppress rent increases for existing tenants. “Property owners are even more incentivized to retain tenants, since units may sit empty for longer in current conditions,” said Zumper CEO Anthemos Georgiades. “[A renter] staying in place will likely mean a minimal rent increase this year, if any.” 

• 59 of Zumper’s top 100 cities saw a drop in rental prices from the previous month, while 12 reported no change. Strong rent growth in some undersupplied Midwest markets and the abovementioned peripheral cities is counteracting the large declines seen in the Sun Belt.

• The National Association of Home Builders reports builder confidence for newly built single-family homes rose by three points to 51 in March – its highest level since July 2023.

• “With the Federal Reserve expected to announce future rate cuts in the second half of 2024, lower financing costs will draw many prospective buyers into the market,” said NAHB Chief Economist Robert Dietz.

• Single‐family housing starts in February reached 1,129,000 – 11.6% above the revised January figure of 1,012,000 and the highest level since April 2022.

More rental market headlines

Residential brokerage stocks dive after NAR settlement – The Real Deal

The Midwest trails Miami on the hottest rental markets list – Multifamily Executive

Millennials flock to single-family rentals – Forbes