Rents Retreat Across Sun Belt, Bucking U.S. Upward Trend

While the national rental market edges upward for the first time in a year, the Sun Belt is experiencing a downturn, with major cities seeing some of the sharpest rent declines in the country, according to data from Redfin.

Across the Sun Belt, metropolitan areas including Austin, Texas; Nashville, Tennessee; and Jacksonville, Florida, are seeing declines in rental prices. The shift marks a reversal from the increases seen during the pandemic and reflects an oversupply as the construction boom outpaces demand, experts say.

"The Sun Belt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom," Redfin Senior Economist Sheharyar Bokhari said in the Redfin report.

"But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall," he added. 

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The Sun Belt, a region that stretches across the southern and southwestern U.S., includes states from Florida to California. Notably, the region had also been a hot spot for real estate development, particularly during the pandemic, when remote work policies enabled many to relocate away from colder, more expensive cities.

According to the report, the region is reeling from the consequences of that overexpansion. During the pandemic, a surge in construction aimed at meeting escalating demand led to a glut of available properties today. Coupled with a normalization of migration patterns, this is now resulting in downward pressure on rents.

In cities like Austin, rents plummeted by 6.6% year-over-year, according to Redfin's data. Nashville, Tennessee, saw a 5.9% decrease, and in Jacksonville, Florida, rents fell by 5.6%. The figures represent some of the steepest declines across the U.S., where the median national asking rent otherwise rose slightly by 1.1% to $1,648.

"The good news is that the uptick in housing supply in the Sun Belt has improved affordability for renters, which can be a lesson for other American cities grappling with housing affordability challenges," Bokhari noted. 

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Florida's major metro areas are also seeing declines. In Miami, rents fell by 5%, while Jacksonville saw a 5.6% drop. The cities, along with others in the state, have seen an influx of new constructions that now exceed the current demand, contributing to the falling rental prices.

The oversupply issue is mirrored in other Sun Belt cities like San Diego and Phoenix, where rents have decreased by 4.7% and 4.6%, respectively.

However, the regional downturn contrasts with trends in other parts of the country, particularly the Midwest and Northeast, where rental markets are seeing increases. For instance, Minneapolis and Cincinnati saw some of the largest increases, with rents jumping 10.3% and 9.9%, respectively. 

Although the rate of rent increases has slowed compared to the pandemic period, asking rents remain high, presenting an affordability issue for some renters, Redfin noted. In April, the median rent was $52 less than the record high of $1,700 set in August 2022.

Here are the top 10 U.S. metropolitan areas with the steepest year-over-year declines in asking rents as of last month:

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