For some Americans, affording rent means giving up traveling home for the holidays
It took A' Quinton Ocasio 10 years to be able to rent his own apartment in the Bronx, the northernmost borough of New York City.
The hairstylist from Georgia signed a one-year lease last month for a studio for $2,100 − higher than the national median rent of $1,978.
“It’s a shoebox-size apartment that has no laundry in the building. And the area has nothing to offer other than the train nearby,” he says. “It’s upsetting because for people who have fallen into hard times, there's programs that are set up to help them pay rent, but what about the people who are working hard every day? What about programs to help pay that rent?”
Though the latest data from the Bureau of Labor Statistics suggests inflation is cooling down, with consumer prices slowing to 3.2% from a year earlier in October and lower than 3.7% in September, it also saw shelter price rise 0.3% month-over-month and 6.7% year-over-year.
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Shelter has accounted for 70% of the increase in core prices (excluding food and gas prices) over the past year. The year-over-year shelter price index in October ran twice as high as the overall inflation rate.
In addition to working three jobs, what this means for Ocasio is choosing which holiday to spend with his mother, who lives in Georgia.
“I can't travel for both holidays, and that's sad, because I want to make it home for Thanksgiving and Christmas, you know?” he says. “But I have to choose one or the other.”
This time, he chose Thanksgiving because the family is gathering in Virginia.“Honestly, I just have to work harder,” says Ocasio, who had been saving what he could by renting rooms with friends and acquaintances for a decade, avoiding credit checks and broker fees. “That's honestly the sad truth.”
There are some signs that rents might be stabilizing.
Shelter inflation has been coming down slowly since the summer as new residential construction activity ramped up in 2023, says Lisa Sturtevant, chief economist at Bright MLS.
Although not fully reflected in the consumer price index, rent prices continued to slide in October, dropping more than 1.5% from September. The monthly decline marks the second month in a row that price levels dropped after six months of steady increases that began last February, according to a report by Rent.com
October's rent level marks the first time in five months the median price has been below $2,000 and the lowest price since April of this year. Price growth continues to be held down by below-normal demand, increased inventory, and a return to seasonal price trends that typically begin dropping in the fall, according to the report.
National rent price trends
"After three years of consistent yearly price growth, asking rents contracted in three of the last six months − including twice in the last three months," said Jon Leckie of Rent.com. "October's 0.29% reduction brings the median rent price to $1,978 and marks the seventh consecutive month of sub-one-percent growth on a yearly basis."
Month over month, prices declined for the second month in a row. The price drop from August to September was the first month-over-month decline since April of this year.
If rents are falling, why is shelter cost up, according to the CPI?
The Bureau of Labor Statistics measures changes in the cost of housing for both renters and homeowners as well as lodging away from home and tenants’ and household insurance. But the cost to rent a primary residence is weighted the most.
If a housing unit is occupied by the owners, the bureau computes what it would cost the owner to rent a similar place, known as owners’ equivalent rent (OER). The CPI program collects rent data from each rental unit every six months because rents are locked in place for a given lease term. It also allows for a larger sample, according to the BLS.
In a fast-changing, volatile housing market, however, that measure can seem outdated compared with private indexes, such as Rent.com, that look at current leases.
Will rent prices continue to fall?
That is unlikely, Sturtevant says.
“Permits for new construction are lower, which means that the boom in supply that has brought rents down in some markets will likely slow in 2024, which could put upward pressure on rents again,” she says.
Year to date (January to October), the number of building permits issued for multifamily buildings (buildings with five or more units) is down 20% compared with the same period last year.
Building permits are a leading indicator of new apartments available for lease. After building permits are issued, it can take 12 to 18 months to construct the apartment building.
Regional rent price trends
Rents in the Midwest region grew by more than 4% year-over-year after climbing nearly 5% on a yearly basis in September. Still, prices there remain relatively affordable at $1,430, which is nearly $200 less than the South and more than $1,000 less than asking rents in the Northeast.
Northeastern rents also grew year over year, gaining 3% over prices from 2022. Rents there are the most expensive regionally at $2,463. The West was the second most expensive region with a median price of $2,392. Prices dropped 1.5% on a yearly basis there, continuing a trend of year-over-year price declines that began in January 2023. Prices in South stand at $1,641.
Swapna Venugopal Ramaswamy is the housing and economy reporter for USA TODAY. Follow her on Twitter @SwapnaVenugopal