According to The Sun, Renting in the U.S. is becoming either cheaper or more expensive, depending on your location. Recent research indicates that the U.S. rental market is experiencing a significant regional divide.
Midwest Rents on the Rise
According to Realtor.com’s September Rental Report, rents in the Midwest are increasing, while rental prices in the South are generally declining. Cincinnati, St. Louis, and Minneapolis are among the cities with the fastest-growing rents. Cincinnati saw the highest increase at 3.4%, followed by St. Louis at 2.6% and Minneapolis at 1.9%. Only Chicago (-2.6%) and Detroit (-0.3%) reported rent declines in the Midwest.
Southern Markets Experiencing Declines
In contrast, southern metros dominate the list of markets with the most significant annual rent decreases. Eight of the ten metros with the steepest declines are located in the South, with Nashville, Tennessee, experiencing the sharpest drop at -4.8%. Other Southern cities that saw declines include Dallas, Austin, Birmingham, Memphis, Atlanta, Miami, and San Antonio. The growth of new multi-family housing in these areas is contributing to a cooler rental market, providing much-needed relief for renters.
Supply and Demand Influencing Rental Affordability
Danielle Hale, chief economist at Realtor.com, notes that the balance between housing supply and demand is a critical factor affecting rental affordability. “In Southern markets, increased multi-family inventory is easing competition among renters and driving down prices,” Hale stated. Conversely, in the Midwest, where demand still outstrips supply, rents continue to rise.
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National Trends and Future Projections
Despite the regional discrepancies, national rent prices have remained relatively stable, which could lead to slower shelter inflation in the coming months. This stability may alleviate some of the recent pressures on price increases.
Impact of Federal Rate Cuts on Housing Costs
This research coincides with projections from economists indicating that housing costs may decrease within three months due to recent Federal Reserve rate cuts. Last month, the Federal Reserve lowered interest rates by half a percentage point, marking the first reduction since 2020. This move is intended to regulate inflation, stimulate the economy, and make housing more affordable for consumers.
Housing experts suggest that while the effects of rate cuts will take time to manifest, the ongoing cycle of rate reductions is likely to exert downward pressure on the cost of living. Additionally, a federal rate-cutting cycle is expected to lower construction costs and promote increased housing development, ultimately boosting supply.
