National Apartment Rents Hit a 14-Month Growth Plateau in March Amid Small City Boom

Key takeaways:

• The national average rent was $1,371 in March 2018, 2.5 percent higher than this time last year, and up 0.3 percent ($4) month over month, according to data from Yardi Matrix.
• 86 percent of the nation’s biggest 250 cities have seen rents grow in March year over year, in 12 percent of cities rents remained unchanged, while only 2 percent experienced rent drops compared to 2017. 
• 29 of the top 30 fastest growing rents are in small cities, including Reno, Tacoma, and Orlando. 
• Among the largest U.S. cities, Las Vegas, Denver, and Phoenix had the fastest rising prices in March, while Brooklyn, Manhattan, and Portland the slowest. 

Two-bedroom apartment rents are outpacing other unit sizes

Two-bedroom apartment rents growing faster than rents in other apartment sizes, posting a year-over-year increase of 3.3% compared to a low 2.1% in studio rents. In March 2018 the average rent for a studio apartment in the U.S. was $1,262, a one-bedroom apartment costs on average $1,232, a two-bedroom apartment $1,417, and a three-bedroom unit was renting for $1,655 on average, 3.2% more expensive than in March 2017.

Nationally, Reno, Tacoma, and Orlando rents are among the top 10 fastest rising in the U.S.

No sign of Spring yet in the apartment market, as the national average rent continues its sluggish under 3% growth year-over-year for the 14th month straight. The national average rent increased by 2.5% in March compared to the same time last year, reaching $1,371/month. Month-over-month, national rents showed a more visible 0.3% increase, or $4, compared to the previous month.

The highest rent increases are taking place in small cities across the country, with Odessa, TX in 1st place with a 37.1% increase for the year, and Orlando, FL in 10th place with a 7.8% rise in prices over the year. Apartments in Orlando averaged $1,340/month in March. Also notable in the top 10 are Tacoma, WA — where rents increased by a hefty 8.3% y-o-y, reaching $1,209/month — and Reno, NV — with an even higher increase, 10.5%, with an average rent of $1,141/month. A lack of new apartments is commonly blamed for rising rents in small cities, as is the case in Reno and Tacoma. In other cities, like Orlando, rising rents are a sign of economic recovery, after suffering a longer downturn period than larger markets.

Only five of 250 cities saw rents decline by more than 1% in March, including Lubbock, TX (-4.3%), Norman, OK (-2.6%), Louisiana’s New Orleans (-2%) and Baton Rouge (-1.4%), and Portland suburb Hillsboro, OR (-1.6%). Also in the bottom 10 for slowest growing rents are Richardson, TX, College Station, TX, Brooklyn, NYC, Arlington, VA, and Brownsville, TX.

Large cities: Fast-growing rents in Phoenix surpass those in Detroit

Las Vegas apartment rents are the fastest-moving compared to prices in other large cities, up 5.9% from $917 in March last year, to $971 this March. Denver renters saw the second highest rent hike, 5.8%, from an average rent of $1,460 a year ago, they’re now paying $1,545/month for an apartment.

With a 5.7% jump in apartment rents in March, Phoenix is the third fastest growing rental market among the largest cities in the U.S. The Arizona State Capital is thriving on demand from incoming older renters in search of sunnier days and more affordable rents, currently at $961/month. This growth is sustained by an improving local economy and low unemployment numbers, in concert with local efforts to revitalize the neglected areas of Phoenix, like its Warehouse District.

In fourth place, Detroit rents were up 5.6% in March, while Jacksonville and San Diego shared the fifth spot with a 5.1% year over year increase in rents.

Rents in Brooklyn and Manhattan are buckling under the pressure of large volumes of new apartments, decreasing by -0.8% and -0.3% respectively. Rents in Portland, OR are meeting the same fate, growing by a meager 0.7%, averaging $1,449/month in March. Austin rents are the fourth slowest-rising in the U.S., up by only 0.9% in a year, currently at $1,297, only $12 more than they were this time last year. Declining rents are securing Washington, D.C. the fifth spot in the U.S. among the slowest growing large rental markets, with a modest 1.3% year-over-year increase. The average apartment in the nation’s capital rents for $2,073 as of March 2018.

Mid-size cities: Sacramento rents cruising at high-speed, while rents in New Orleans hit the breaks

The price of rent in Sacramento is cruising at high-speed, posting once again the highest year over year increase among mid-sized cities, 7.2%. The average rent in Sacramento is just about ready to hit $1,300/month, causing Sacramentan renters much angst and also exacerbating the city’s homelessness problem.

With all the new apartment construction in Colorado Springs at the high-end, rents have climbed by 6.3% y-o-y and 0.8% m-o-m, reaching $1,080 in March. Tampa, FL has the third fastest rising rents among mid-sized cities, with an annual increase of 5.6%. Apartments in Tampa go for $1,246/month on average. Arlington, TX rents were up by 5.4% y-o-y in March. Rents in Mesa, AZ also climbed 5.3%, very similar to the evolution of rent prices in Phoenix.

At the lower end are New Orleans, LA, where rents dropped by -2%, to $1,088/month as of March. Wichita, KS rents are the second slowest, with an annual increase of 0.6%.  The third slowest mid-size city is Tulsa, OK, with a 0.8% increase in rents. Rents in Raleigh, NC have slowed down significantly, rising by only 1.2% over the year, while in Albuquerque apartment rents rose by 1.1%. Also among the 10 slowest growing mid-size markets are Cleveland, OH, with a 1.2% year over year increase and an average rent of $1,002, and St. Louis, MO with a year over year rent increase of just 1.4% and an average rent of $885/month in March.

Rents in small cities booming in 29 of the top 30 with largest increases in the U.S.

Of the top 30 largest rent increases in March, small cities claim 29 spots, Sacramento being the only larger market in the top. Odessa and Midland, TX continue to see the highest rent increases in the country, with spectacular yearly jumps of 37.1% and 29.9%, respectively, although not as high as last month. Yonkers, NY climbed back to the top 5, with a 10.7% increase in rents, followed by Lancaster, CA with a 10.6% increase year over year. Rent prices in Reno, NV appear unstoppable, posting another double-digit increase, 10.5% over the year, reaching $1,141 in March.

Other small cities suffering from big rent increases in March are Fort Collins, CO (8.9%), Tacoma, WA (8.3%), Greeley, CO (8.3%), Elizabeth, NJ (8%), and Orlando, FL (7.8%). Phoenix metro area’s Peoria, AZ is also seeing a big rise in rents, 7.5%, the 12th highest in the U.S., and also Gilbert, AZ is in 19th place, with a 7.1% rent increase over the year.

Rents dropped in March in slower rental markets Lubbock, TX (-4.3%), Norman, OK (-2.6%), Hillsboro, OR (-1.6%), Baton Rouge, LA (-1.4%), and Richardson, TX and College Station, TX (both by -0.8% year over year).

The New York area is the most expensive for renters in the U.S., led by Manhattan, NYC with an average rent of $4,066 in March. In Brooklyn, the average rent for apartments is $2,688 and in Jersey City $2,825. Northern California is home to 5 of the top 10 priciest rents in the country. San Francisco has the second most expensive rents after Manhattan, $3,433/month on average. Average rents in San Mateo, CA go as high as $3,146. Apartment rents in Sunnyvale, CA go for $2,775 on average, in Santa Clara $2,753, and in San Jose $2,637. The Boston area is also in the top 10, with an average rent in Boston of $3,244, the third most expensive in the U.S. Cambridge, MA rents are in fifth place, at $3,015.

Among the 250 cities surveyed, Wichita, KS has the lowest rents. Apartments in Wichita cost on average only $632/month. The second most affordable is Tulsa, OK, with an average rent of $669, followed by Brownsville, TX with an average rent of $681. Texas’s Killeen and Amarillo are also in the top 10 for lowest rents, as well as Ohio’s Toledo and Dayton, with an average rent of $689/month and $731, respectively.

Check out the average price of rent in your city by using this interactive table:

Methodology:

RENTCafe is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States.

To compile this report, RENTCafe’s research team analyzed rent data across the 250 cities in the US. The report is exclusively based on apartment data related to buildings containing 50 or more units. Our report includes cities with populations over 100,000 and a rental stock of at least 2,900 apartments in 50+ unit buildings.

In this report, large cities are cities with a population of 600,000 people or more, mid-sized cities are cities with a population between 300,000 and 600,000, and small cities are cities with a population of less than 300,000. 

Rent data was provided by Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks and equity sources underwriting investments in the multifamily, office, industrial and self-storage sectors. Rental rate coverage is for Market Rate properties only. Fully Affordable properties are not included in the Yardi Matrix rental surveys and are not reported in rental rate averages.

Starting with the January 2017 rent survey, Yardi Matrix is using a methodology that incorporates more properties into the sample which caused slight changes in overall rents and year-over-year changes compared to the previous reports. We expect this methodology adjustment to produce more accurate averages at the national and metro levels.

*National averages include 130 markets across the U.S., as reported by Yardi Matrix.