The 'tide turns' in the housing market as asking rents fall by the most in nearly 4 years

Rental vacancies also hit their highest level since early 2021, giving prospective tenants more options, Redfin reported.

• Median asking rents saw their biggest year-over-year drop since February 2020, Redfin said.
• That comes as a surge in supply has sent rental vacancies to the highest since early 2021. 
• "Renters are finally catching a break," Redfin Chief Economist Daryl Fairweather said.

The rental market may finally be shifting in favor of prospective tenants, as better deals are on the rise.

"The tide turns for renters," Redfin said in the title of its latest report, which found that US median asking rent dropped 2.1% in November from a year ago. This marked the largest annual decline since February 2020, it added.

Climbing rent prices have been a broad theme since the boom of remote work, only to be made worse by a shortage in housing supply — an issue faced by both homebuyers and potential renters. 

But a surge in construction has boosted inventory, with the number of completed apartments up 7% year over year in the third quarter, Redfin said.

Meanwhile, rental vacancies hit their highest since the first quarter of 2021, prompting landlords to offer more concessions to attract new tenants.

That's backed by earlier data from Zillow, which found that 30% of rental listings in November offered at least one perk, rising from 24% in the previous year. 

"Renters are finally catching a break," Redfin Chief Economist Daryl Fairweather said in the report. "Better deals are easier to come by because landlords are doling out concessions and rents have started falling in a meaningful way. Rising supply also means renters have more good options to choose from."

Still, Redfin cautioned against expectations of a broader rent drop through 2024. While more apartments have come online, few single-family homes have become available. And larger rental units will probably see higher prices, given growing families and the popularity of remote work. 

While prospective homebuyers will have more reason for optimism in 2024, many will remain priced out, forcing them to keep renting.

Home prices may have limited downside, as other analysts have forecast mortgage rates to remain between 6%-7% next year.