Surging rent prices are a nationwide phenomenon but certain cities are feeling the pinch more than others. According to newly released Bank of America data (pdf), Phoenix and Atlanta saw the biggest yearly increases in median rent for the month of July, up 15% and 11% year over year, respectively.
That hike compared to a national median rent increase of 7.4% year over year in July, a slight pickup from 7.2% in June. The already expensive coastal cities of Los Angeles and New York only increased by 3% and 4% year over year in July although they are setting other records. In Manhattan the average rent for new leases surpassed $5,000 in July for the first time. The bank also noted that the data may not capture the real effective rent in places like New York City, where it has been common for landlords to offer several months of rent free as a concession instead of lowering the list price.
Roughly 34% of US households are renters, but for households with family income less than the national median income, home ownership was just 52.6% in the second quarter of 2022, indicating that around 47% of lower income families are renters.
Although inflation has eased—last month prices stayed flat thanks to the Fed raising interest rates and the price of oil coming down—rental inflation is still on its way up.
“Notably, even as overall inflation pressure eased in July, rent of primary residence, according to data from the Consumer Price Index (CPI) report, increased further to 6.3% year over year, the fastest pace since 1986,” the Bank of America report stated. “Consumers will continue to face the downward pressure to their financial situations, although elevated savings and wages may provide an offset for now,” it added.
However, there’s at least one part of the country that’s seeing the opposite trend. A separate report from Rent.com found that Idaho saw average rents decline for July. The average cost of a one-bedroom apartment in the state fell 19% as the once hot destination for city dwellers seeking space during the peak of the pandemic began to cool.