It’s expensive to rent an apartment in the U.S. in 2022. But after steep increases throughout 2021, price stability may be in sight.
We analyzed rent price trends from February 2019 to February 2022. The data detail the average monthly rent for one- and two-bedroom apartments, as well as monthly home prices during the same period. We studied month-over-month and year-over-year rent price trends for all three home types.
Current rent prices are influenced by many factors. They include historically low apartment vacancy rates, a competitive housing market and a lack of affordable housing across the country. The end of eviction moratoria designed to keep renters in their homes during the pandemic also coincided with significant rent increases.
Rent price trends for one-bedroom apartments
The average cost of a one-bedroom apartment in the U.S. stayed steady or dropped during the first year of the pandemic. The monthly rent for a one-bedroom apartment fell 0.17 percent between March and April 2020.
Over the next four months, monthly rent costs only inched up a percentage point or two. The highest increase was 1.66 percent in April 2020. The smallest increase was 0.75 percent in July 2020.
But starting in August 2020, rent price trends for one-bedrooms decreased month-over-month by as much as 2.24 percent (September 2020). This downward price swing continued for the rest of 2020 and into January 2021.
Just like month-over-month rates, year-over-year rent price trends for one-bedroom units also decreased in the fourth quarter 2020. They continued to decrease slightly until the end of the first quarter of 2021. The savings were just a fraction of a percentage point (between 0.01 percent and 0.94 percent) between September 2020 and March 2021.
Renters would soon be nostalgic for these comparatively small year-over-year price increases.
Because once one-bedroom rents started to rise, they rose quickly. Year-over-year rent price trends ticked steadily upward, between 1.35 percent in April 2021 to 7.28 percent in August 2021.
By September 2021 (10.54 percent), year-over-year rent price increases were measured in double digits. The year-over-year monthly price increase would stay in the double digits until the end of the survey period.
By February 2022, the average monthly rent for a one-bedroom apartment was $1,756. That’s up 16.09 percent from February 2021. It’s also the largest apartment price increase of any kind (year-over-year or month-over-month) in the survey period. Only home prices would increase more dramatically.
Rent price trends for two-bedroom apartments
The year-over-year price of two-bedroom apartments also decreased during the first month of the pandemic, dropping 1.22 percent from March 2019 to March 2020. This is a larger decrease than we saw in one-bedroom apartments.
It’s also the last year-over-year price decrease recorded for this apartment type during the entire survey period. From March 2020 to February 2022, the cost of two bedrooms rose steadily.
The year-over-year rent price went up between 1.74 percent and 4.43 percent between April 2020 and August 2021. The lowest price increase was just 0.32 percent in September 2020. The largest was 6 percent in August 2021.
In September 2021 ,the year-to-year rent increase grew by double digits (10.11 percent). It would stay in the double digits until February 2022. The average price for a two-bedroom apartment in February 2022 averaged $2,129 per month. That’s up 14.44 percent from the year before.
Monthly rent prices fluctuated for two-bedroom apartments. Month-over-month rates for two-bedroom apartments steadily increased between March 2020 and July 2020. The smallest increase was 0.61 percent in March 2020. The largest jump was 2.52 percent in April 2022. That’s the largest month-over-month apartment price increase in this survey.
The average monthly rent for a two-bedroom apartment decreased from the month before in August, September, October and November 2020. The largest month-over-month decrease was 2.74 percent in September 2020. The smallest decrease was .43 percent in November 2020. The month-over-month rate ticked up 0.12 percent in December 2020, before falling 0.69 percent in January 2021.
Month-over-month rent price trend continued to rise again in February 2021. The monthly price increase ranged from a low of 0.08 percent and a high of 2.78 percent until February 2022, when this survey period ends.
Reasons for higher rent prices across the country
A number of factors combined to increase monthly rents. Pandemic-related pressures and policies had an effect. So did a historically high home prices and the lowest apartment vacancy rates in decades.
Low vacancy rates
Supply and demand affect apartment prices. When there are fewer apartments on the market, it’s harder for renters to shop around to find the best price. Competition for available units can be intense, so renters may accept a higher monthly rent payment, just to keep a roof over their heads.
When vacancy is low, landlords and property owners have more pricing power. And apartment vacancy rates in 2021 were lower than they’d been in a generation.
In the fourth quarter of 2021 (October-December), apartment vacancy rates hit a 37-year low, according to the U.S. Census Bureau. The apartment vacancy rate was just 5.6 percent. That’s both the lowest rate during the pandemic and the lowest rate since the first quarter of 1984.
By the end of 2021, one-bedroom apartment rents increased in 96 percent of the states surveyed. Experts in the only two states where rent prices dropped during this period (South Dakota and Nebraska) speculated that this was caused in part by higher than average vacancy rates.
The most expensive rent prices in 2021 were recorded in densely populated regions like California, Massachusetts, New York and New Jersey, where demand for apartments continues to be strong. Coastal and warm weather destinations also experienced a surge of new residents who could work from home, which lowered vacancy rates and increased average rent prices.
A competitive housing market
Rent prices rose during the pandemic. But home prices in the U.S. have risen even more. The year-over-year home price in March 2020 was 6.71 percent higher than in March 2019, and prices haven’t stopped rising since.
By August 2020, the year-over-year increase was up to 10.85 percent. Double digit price increases from the previous year would continue every month through February 2022. Home prices peaked with a historic 25.84 percent year-over-year increase in May 2021.
This high-water mark wasn’t a statistical outlier. April 2021 saw a year-over-year increase of 21.45 percent. May 2021 was up 24.52 percent over the previous year.
The average monthly U.S. home payment was $3,900 in February 2022. That’s an increase of 16.07 percent from the year before.
Because the housing market took off about a year before the apartment rental market did, many people couldn’t afford to buy a home. So even if buyers could afford a home, it was a challenge to find available inventory.
Many potential homebuyers were priced out of the housing market. They continued renting instead. This put more demand on apartment inventory and kept rent prices climbing.
A lack of affordable housing
There are relatively few affordable housing units in the U.S. This made the housing and apartment inventory crunch even more challenging, especially for low-wage workers. Out of Reach 2021, a report by The National Low Income Housing Coalition (NLIHC), details how the pandemic made the affordable housing problem worse.
“Even before the pandemic, our nation had a shortage of 7 million affordable and available homes for renters with the lowest incomes,” writes U.S. Department of Urban Housing and Development (HUD) Secretary Marcia Fudge in the introduction to the NILHC report. “As a result, 70 percent of these households routinely spent more than half of their incomes on rent.” (That total is much more than the 30 percent that NLIHC recommends spending on housing costs.)
Compounding the problem is the fact wages haven’t kept pace with inflation. This burdens low wage workers the most — and limits their housing options even more.
The federal minimum wage is $7.25 an hour. A full-time worker making minimum wage can’t afford a two-bedroom apartment in any U.S. state or city, according to the “Out of Reach 2021″ report. And even though 30 states, Washington, D.C., and some cities and counties have passed laws to pay workers a higher minimum wage, that still doesn’t solve the problem.
The report found that a full-time worker would need $24.90 per hour to afford a modest two-bedroom at the fair market price. A one-bedroom would require an hourly wage of $20.40.
The end of eviction moratoria
The pandemic presented major financial challenges to U.S. workers and businesses. But these challenges didn’t affect all workers equally.
“As of late March 2021, nearly 14 million renter households with annual incomes below $50,000 had lost employment income during the pandemic,” explains the “Out of Reach 2021″ Report. “According to the Economic Policy Institute, over 82 percent of the 9.6 million net jobs lost in 2020 were held by workers in the bottom quartile of the wage distribution.”
Census reports revealed that 39 percent of white, non-Latino adults had lost income by March 2021. The rates for Black and Latino adults were much higher — 49 percent and 58 percent, respectively.
In an effort to help keep renters in their homes, the Centers for Disease Control and Prevention (CDC) passed an eviction moratorium. Many states followed suit. These eviction moratoria made it illegal to evict a tenant for non-payment of rent if they could prove they’d been financially impacted by the pandemic.
The Supreme Court blocked an extension of the CDC eviction moratorium in August 2021. The cost of both one-bedroom and two-bedroom apartments saw double digit year-over-year growth by the next month.
In September 2021, the price of a one-bedroom apartment was 10.54 percent higher than the year before. The cost of a two-bedroom increased 10.11 percent during the same month. Year-over-year growth remained in the double digits for both apartment types until the survey period ended in February.
Rent price trends in the future
Housing experts predict that the apartment inventory crunch will continue at least into mid-2022, fueled in part by rising mortgage rates. Rising interest rates pushed mortgage rates to above 5 percent in April 2022. That’s the highest rate since February 2011.
Rising interest rates will price some prospective home buyers out of the market. They’ll continue to rent, which will keep apartment vacancy rates low. But renters might catch a break later in the year.
Rent prices are up dramatically year-over-year. But month-over-month increases are much more modest. The monthly cost of a one-bedroom apartment increased by less than 1 percent month-over-month since August 2021. Two-bedroom apartments have stayed under 1 percent month-over-month since October 2021. If this trend continues to hold, it will establish a new baseline rate for renters.
It will still be more expensive to rent a one- or two-bedroom apartment in 2022 than it was before the pandemic. But monthly rent price trends may level off later in 2022. Renters will have a better idea of what to expect and how to budget for housing costs.
