The national average rent in the US grew by only 2% in May, the the slowest start to the spring-summer rental season since 2010, according to data compiled by RentCafe. It's only the latest sign that a rental slowdown that started in high-end urban markets like Manhattan is spreading across the country after years of rising home values and rents.
The national average rent in May 2018 was $1,381 per month, an increase of just $27, or 2%, compared with a year prior. That's the weakest annual growth for this time of the year since May 2010. Month-over-month, national rents have grown 0.3%, or $4, since April.
Most of the growth was registered in small cities and towns that are growing in population, jobs and housing prices with the top 25 largest increases in rents happening in small markets.
Among large cities, rents were virtually stagnant in Manhattan and Brooklyn, but grew rapidly in Detroit and Las Vegas.
Large numbers of apartments going online across the country are giving renters more options, which has in turn helped alleviate a housing supply shortage.
Stockton Calif. saw the fastest rent acceleration of all mid-sized US cities last month, climbing 5.5% to $1,102.
As we noted earlier, small markets like Odessa and Midland, Texas are booming thanks to a resurgent energy industry. Rents increased by more than one-third in both Texas cities.
Indeed, growth is starting to shift from larger to smaller cities as people leave crowded cities like New York and San Francisco, with their expensive rents and cost of living, and move to smaller cities, or even back to their home towns. However, demographic shifts like this, which start with more jobs moving to those areas, often drive costs higher, including home values and, subsequently, rents.
But big cities still dominate measured by highest rents. Manhattan, San Francisco and Boston recorded the highest average rents in the US last month, at $4,063, $3,453 and $3,282. But as more millennials move elsewhere after realizing that building a life in the big city isn't all that easy or fun, we imagine the trend of mid-size cities leading growth could continue.