National monthly rent growth rates topped 1% in May, with the exception of large California cities that saw declines, Zumper says in its monthly report.
“May marks the first time we’ve seen national monthly growth rates of over 1% since October 2022,” said Zumper CEO Anthemos Georgiades in a release. “This notable rise in rent coupled with the current persisting inflation suggests that there will be even more pressure put on the CPI (Consumer Price Index) in the coming months, and rate cuts by the Fed may be pushed back further than previously anticipated.”
Highlights of the report:
- The national rent index saw both one- and two-bedroom apartments increase 1.2% this May to medians of $1,504 and $1,865, respectively.
- The monthly uptick in the national rent index – coupled with the current persisting inflation – suggests that there will be even more pressure put on the CPI in the near future and rate cuts may be pushed back even further.
- Demand has shrunk in some of the biggest California cities as the majority of this state’s markets in this report experienced declining annual rent rates.
- Syracuse and Columbus rents were the fastest growing nationwide, both climbing over 20% since this time last year.
Rent declines in major California cities
The report says seven of the 11 larger California cities had negative annual rent rates for one-bedroom units, and of those seven declining markets, nearly all are located in the top 20th percentile in terms of price and population. Oakland and Sacramento led the pack with rents down between 8% and 9% since this time last year. Los Angeles, San Jose, San Francisco, San Diego, and Long Beach followed suit.
“It seems that it is less of a supply factor that is driving rents down in California right now, which is what’s happening in many other U.S. markets and especially in the Sun Belt area, but more of a demand one,” Zumper said in the report.
Of the top 50 largest markets, the Bay Area and the Los Angeles metro area have seen some of the largest population losses in the last few years. These two areas have also not recovered from pandemic-related job losses, as Los Angeles had the most severe decline in nationwide employment, currently sitting at nearly 60,000 jobs below its pre-pandemic rate, while San Francisco had about 45,000 fewer jobs.
California actually posted the highest unemployment rate of all states in April, sitting at 5.3%. Meanwhile, San Diego experienced net move-outs in nearly every submarket and experienced the worst demand performance of the nation’s 150 largest cities, and Sacramento’s occupancy rate has continued to decline every quarter from 2021 through 2023.