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Rents for one- and two-bedroom apartments rose in March for the first time in six months.
The monthly cost of a one-bedroom apartment across the United States rose to $1,487, an increase of 0.3% from February. The price of a typical two-bedroom apartment also jumped 0.5% to $1,847, according to a new report from real estate data site Zumper.
“It's kind of expected,” Zumper spokeswoman Crystal Chen said. “When we get to the warmer months, that's when demand picks up.”
While prices have risen overall, some metro areas have seen a decline. For example, the rent for a one-bedroom apartment in Baltimore, Maryland, is $1,390, down 0.7% from last year, per Zumper.
Arizona is unique, as rent declines have been assessed in all major metro areas. Statewide, the median price for one-bedroom apartments fell to $1,311 in March, down nearly 4% from $1,365 a year ago, according to Zumper data.
Experts say the slight increase in prices in the broader rental market may be a reflection of old seasonal patterns.
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“During the colder months of the year…the rental market tends to be cold,” said Jacob Channel, chief economist at LendingTree. “As we get closer to summer, we're starting to see rental prices rise in more places.”
However, some fundamental factors such as supply and demand may also be reflected, says Susan M. Wachter, a professor of real estate and finance at the Wharton School at the University of Pennsylvania.
Why are Arizona prices falling?
Some markets in the country get colder than others. Prices in the Sun Belt and Intermountain West are seeing prices decline, and Arizona is a prime example, Chen said.
“All of the Arizona cities in our report had flat or declining year-over-year rates,” she said.
For example, Glendale saw the largest drop in rents with one-bedroom apartment prices down more than 10% from this time last year.
Arizona has a lot of online supply, which keeps rental prices low in the area, Wachter explained.
“In the data, there is some evidence of fundamentals at play, as well as seasonality,” she said.
Zomber found that Phoenix is expected to add more than 33,000 new available units this year, and that many buildings in the state are offering perks, such as waiving deposits or application fees and up to two months of free rent.
“If you're in this market, it's a great time for renters to snap up an apartment rich with amenities that would otherwise be out of reach,” Chen said.
The supply affects rental prices elsewhere
While more supply is expected to rise in the Sun Belt and Intermountain West, much of the Midwest and Northeast markets are in short supply, causing rental prices to rise.
“Supplies coming online definitely vary by market,” Wachter said.
Rental prices for one-bedroom apartments are up 25% in New York City over the past year, according to Zumper. Rental costs and high competition also plague areas like Columbus, Ohio, and Norfolk, Virginia.
However, although prices are higher, they are significantly lower than they were a year ago, and even more so compared to the market volatility of 2021 and 2022, when pent-up demand kept prices high.
The channel said: “Rent prices are rising and they are expensive, but they are not suddenly rising again.”
“We don't expect to see national interest rates ever rise as much as in 2021 and 2022,” Chen said. “Seasonality is back after a crazy couple of years.”
While many factors affect housing affordability in the United States, the main factor, in the simplest terms, is poor supply, Channel said.
“The more rental units that are built, the more prices are likely to come down, and I think Arizona shows that well,” he said.
