Rent prices likely to pause in 2024: What this means for renters

The US rental market may see some relief in 2024 upon an injection of fresh apartment supply. Rent prices are expected to stay flat, or "muted", throughout the year, according to RealPage data.

Yahoo Finance Housing Reporter Dani Romero summarizes the key takeaways from RealPage's report as Americans continue to seek out rental properties amid inflated prices in the US housing market.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Renters nationwide can breathe easier this year as an influx of apartment supply pressures rent growth. This is good news following two years of rent increases. Let's bring in Yahoo Finance's Dani Romero for more on what renters can expect this year. That seems like good news.

DANI ROMERO: Yeah, changes in rent prices are-- it's going to stay flat this year as more supply is going to be added to the market, adding some downward pressure on rents. And data from RealPage shows that asking rents increased 0.2% in February from the previous year. And that's actually notably lower from the historical average of a 0.6%. Apartment occupancy is staying relatively around that 94%.

However, RealPage is really raising some flags in regards to the occupancy levels. They are saying that there could be some challenges ahead given the fact that there has been so much construction activity that has been happening in the apartment sector. So there could be some weakness there.

But what is the takeaway from all of this? Rent demand is still strong. And so things aren't as bad as they seem. But also bottom line, how does this correlate to the inflation data that we're going to be getting next week? Well, remember, this real-time data that we're getting will not be reflected in the CPI report.

- Right.

DANI ROMERO: CPI is shelter index, really is a lagging indicator compared to real-time data. But what really stands out to me consistently from economists is that they say that rents have not come down enough due to the fact of these affordability concerns that are weighing down the housing market. So we are-- which is one of the drivers that we are still seeing that rental inflation is still sticky.

- Well-- and I'm also curious. I mean, as with everything in real estate, everything is local, right?

DANI ROMERO: Yes.

- Everything is regional. And so what do we know-- or do we have data from them about the differences regionally in what's happening with rents?

DANI ROMERO: So Texas is really seeing that that is a lagging indicator. They've actually seen a lot of price cuts in the Southern states. I would say also the Midwest. But then if you look at Virginia Beach, actually, they saw a lot-- a little bit more of a price increase.

So yes, real estate is definitely on a regional basis. So we are seeing some markets that are dealing with really drops in rents and then other ones that are actually, they're increasing by 3%. But again, it goes back to that factor of the affordability crisis that is happening is real-- that's weighing down the housing market is really impacting. And we're seeing that in the CPI report.

- Right. Interesting. All right. Thanks, Dani. I appreciate it.