Rents across the country continued to tick up in March—but at a much slower pace.

Tenants shelled out about 2.5% more last month compared with a year earlier in the 50 largest metropolitan areas, according to the most recent Realtor.com® rental report. Nationally, the median rent was $1,732 a month. While that figure was $15 higher than in February, rents were down $32 from the peak set in July 2022.

“Both rent prices and price growth have cooled, which means relief for renters,” says Realtor.com economist Jiayi Xu. Still, “it’s important to remember that price levels are very high.”

Indeed, with monthly rent costs roughly one-quarter higher than they were before the COVID-19 pandemic, even areas that were once considered affordable are starting to feel the pinch.

(Realtor.com looked at rents for studios; one-bedroom and two-bedroom apartments, condos, and townhomes; and single-family homes in the 50 largest metros. Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)

The West may not be the best for budget-minded renters

The rental market is starting to revert back to a more pre-pandemic status quo. Tenants aren’t chasing warmer climates and more square footage with the same fervor that they were at the height of COVID-19.

Rental growth in Sun Belt markets was a mere 0.2% higher than a year ago and was down 4.7% year over year in places such as Phoenix. Western coastal markets like San Francisco and Los Angeles both saw 0.8% yearly declines.

Prices were down the most in the Riverside, CA, metro. They fell 5.3% in March from the same month a year earlier,

“COVID freed up a lot of people from their traditional commutes, and in the case of Southern California, this meant the ability to move away from Los Angeles,” says Vivian Zhou, a real estate agent with Flyhomes in Southern California. “Riverside offered the extra space, lower costs, and great weather everyone was looking for.”

But some folks have been forced to move back to larger cities to be closer to their offices, hurting these farther-out areas. As Xu points out, though, prices across the country are still lofty, and that’s helping nudge people into the parts of the country that are more affordable by comparison. As a result, prices in these cheaper areas are surging.

The Indianapolis metro, where the median asking rent was $1,277 in March, experienced the largest price jump. Rents leaped up 10.3% compared with a year ago. It was followed by Cincinnati, with a 9.6% increase, to a median of $1,196.

Despite the increases in many Midwest markets, tenants may pay less than half what they would in pricier coastal areas. The median monthly rental price in Silicon Valley’s San Jose, CA, was $3,304. In the New York City metro area, it was $2,994.

Smaller equals cheaper

During the pandemic, many renters eschewed smaller apartments. But today, these are the units going up in price the most.

In March, studios were 4.7% more expensive than a year ago, reaching $1,451 a month, while two-bedroom units were 2% pricier, at a median of $1,901 a month. Meanwhile, one-bedroom units cost about 3.5% more, at $1,637. Renters might continue to find more bargains among smaller apartments, as studios have gained 21.7% over the past four years, while the cost of two-bedrooms is up 27.2%.

While demand for sun, space, and other factors might have helped drive pandemic-era migration, extra supply might now become a key factor in pricing, helping to bring costs down for renters. Builders are turning out record numbers of newly constructed apartments, Xu points out, helping ease some of the demand.

Those new units are hitting the market just as the economy might take a turn for the worse, Zhou notes.

“Landlords and potential tenants are planning for what could be a rough 12 months ahead,” she says. “We’ve been hearing about the possibility of a recession, and that takes a toll on the psyche. Tenants are less likely to sign a more expensive lease, and landlords are offering incentives to ensure occupancy in the coming year.”

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