From [HERE] Apartment rents fell in every major metropolitan area in the U.S. over the past six months through January, a trend that is poised to continue as the biggest delivery of new apartments in nearly four decades is slated for this year.  

Renters with new leases in January paid a median rent that was 3.5% lower than they would have paid last August, according to estimates from listing website Apartment List. It was the first time in five years that rent fell every month over a six-month period, according to the same estimates.

Four other market measures by housing-data companies also show that new-lease rents either fell or remained flat in January compared with the previous month, extending a streak of monthly rent declines that began at the end of the summer.

The softening rental market follows an unprecedented run for the apartment and home-rental industry put into motion by the pandemic. Pent-up demand for housingexploded in the months after the introduction of Covid-19 vaccines in late 2020 and a surge in people searching for apartments lifted rents 25% over two years. 

Now, recent declines are a sign that many tenants have maxed out on how much of their income they can devote to rent, while the specter of layoffs has created new concerns for some. Other would-be renters, living with family or friends, remain sidelined by prices that are still far too high for their budgets. 

While some seasonal stalling in rents is normal, the market faces a significant headwind in the biggest delivery of new supply since 1986, according to projections from CoStar Group. Nearly half a million new apartments are coming on line this year as developers seek to cash in on the high rents that tenants have been paying. Many renters are unable to afford to buy a home because of higher mortgage rates and steep prices, so rentals have been in high demand.

Rents have retreated alongside recent declines in home-sale prices, which fell 3.6% between June and November, according to the S&P CoreLogic Case-Shiller National Home Price Index. Higher mortgage rates and softening buyer demand have been weighing on home prices, despite a period this year when lower rates sparked an uptick in buyer interest. [MORE]