Renters find savings by downsizing as national rents continue to fall

For renters aiming to maximize value in the current rental market, downsizing might be a strategic move. According to Realtor.com's latest rent report, rents for studio apartments saw the most significant decline in December 2024, dropping by 1.3% year over year compared to larger units which fell by 0.9%.

Rents decreased in 39 of the largest 50 metropolitan areas. In cities where rents increased, the hikes were generally modest. The median rent for studios across these metros was $1,419, while one-bedroom and two-bedroom units had median rents of $1,579 and $1,880 respectively.

The U.S. median asking rent continued its downward trend for the 17th consecutive month in December 2024. Nationally, the median rent was $1,695—a decrease of $8 from November and down $18 from December 2023.

An increase in multifamily construction has contributed to this softer rental market by expanding supply. Danielle Hale, chief economist at Realtor.com stated: “We are reaping the benefits of the multifamily surge in housing starts that lasted throughout 2023, but as starts and completions slow, we anticipate seeing more balance in the rental market ahead.”

Despite recent declines, current rents remain significantly higher than pre-pandemic levels. Studios have seen an increase of 11.3% over five years; two-bedrooms rose by 19.8%, and one-bedrooms are up by 15.9%. The present figures are still just below peak levels reached in July 2022.

Realtor.com senior economist Joel Berner explained why studio prices lag: “The studio unit renter is most on the margins of being an independent household... After the peak of the pandemic...studio rents saw growth for longer than rents for larger units due to relatively high demand.”

Regionally, Memphis experienced a notable decrease with a drop of 6.7%, making it one of three Southern cities with significant declines alongside Denver-Aurora-Lakewood (5.9%) and Austin-Round Rock-Georgetown (5%). Meanwhile, New York City-Newark-Jersey City witnessed a rise with a year-over-year increase of 5.3%.

The Northeast remains competitive with high absorption rates indicating successful leasing of new units shortly after completion—this trend is evident despite rising rental prices.

Los Angeles experienced a slight decline but future decreases seem unlikely due to post-wildfire price gouging despite protective laws.