Rental prices hit double-digit growth for the first time in two years in August and grew three times faster than in March 2020, according to Realtor.
Additionally, rents posted double digit gains over last year in more than half of the 50 largest metros, led by Tampa (+30.6%), Riverside, Calif. (+28.6%), Miami (+27.0%) and Phoenix (+25.5%).
The U.S. median rental price reached a new high of $1,633 in August as rent growth accelerated to a double-digit pace, up 11.5% year-over-year. Annual rent growth has now tripled since March 2020 (+3.2%) before the pandemic began.
All unit sizes tracked by Realtor reached new rental price highs in August: Two-bedrooms at $1,828, one-bedrooms at $1,524 and studios at $1,338. With demand for more space rising during the pandemic, both two-bedroom (+12.3%) and one-bedroom (11.6%) rents grew by double-digits over last year in August. Studio rents also saw a sizable increase of 8.3% year-over-year to a median $1,338 per month.
In 28 of the 50 largest U.S. markets, rents posted double-digit gains over last year in August. Median rental prices increased by at least 21% year-over-year in each of the 10 metros by August's highest yearly rent growth, which were: Tampa (+30.6%), Riverside (+28.6%), Miami (+27.0%), Phoenix (+25.5%), Las Vegas (+23.4%), San Diego (+23.4%), Memphis (+21.8%), Austin (+21.7%), Orlando (+21.4%) and Atlanta (+21.2%).
Many of August's fastest-growing rental markets are secondary metros offering relatively affordable housing and balanced lifestyles, which have attracted big tech city renters working remotely during COVID.
With rents rising at a faster yearly pace than in nearby Los Angeles (+10.2%) in August, Riverside has held one of the top spots for the highest rent gains for the fourth straight month. Even with the surge in rents, Riverside's median rental price of $2,234 in August remained lower than in Los Angeles ($2,800).
Over the course of this summer (June-August 2021), rents hit new two-year highs in 46 of the 50 largest metros. The remaining four markets in August were big tech cities where annual rent growth had yet to fully recover from steep declines seen earlier in the pandemic: New York (-6.5%), Boston (0.0%), San Francisco (+1.4%) and San Jose (+7.0%).
Rents may not be high relative to recent history in these big tech cities, but they are more expensive than in other markets. All four of these areas made August's top five list of metros by highest rental prices, led by San Jose at a median $2,995.
On top of this, big tech city rents are gaining ground as some homebuyers consider taking a break from this year's challenging market, marked by a shortage of affordable homes for sale.
In August, San Jose rents grew over 50% faster year-over-year than overall home listing prices (+4.2%), at a median $1.25 million in August. If August trends continue, San Jose rents are on track to surpass the previous peak seen in March 2020 ($3,127) by end-of-year.
National rents were calculated by averaging the medians of the 50 largest metropolitan areas. ■