U.S. New Apartment Rents Fall 6.2% as Construction Boom Increases Supply

The median asking rent for a newly constructed apartment in the United States fell to $1,746 in the second quarter of 2024, a 6.2% decrease from the same period last year. This marks the second consecutive quarter of annual declines and the lowest price point in over two years, driven primarily by a historic surge in new apartment completions. For renters, this market shift translates into increased negotiating power, more concessions, and better value, especially in metros that have experienced a construction boom.

Why Are Rents for New Apartments Falling?

The primary driver behind falling rents is a simple equation of supply and demand. Data from the U.S. Census Bureau shows that completions of new, privately financed apartment buildings with five or more units reached their highest level in over a decade during the first quarter of 2024. This influx of new supply forces property owners to compete for tenants.

Monthly asking rents for new apartments peaked at $1,889 in the first quarter of 2022. Since then, a sustained construction boom has gradually increased vacancy rates, giving renters more options. Based on our experience assessment, when supply outpaces demand, property owners often respond by lowering prices and offering incentives like one month of free rent or waived application fees to attract tenants. This trend is particularly pronounced in Sun Belt markets like Dallas, Nashville, and Austin, where construction activity has been most intense.

Which Apartment Types Have Seen the Largest Price Changes?

The decline in asking rent is not uniform across all apartment sizes. The most significant drops have been observed in the most common type of new unit.

• One-Bedroom Apartments: Experienced the steepest decline, with asking rents falling 9% year-over-year to a median of $1,566.
• Two-Bedroom Apartments: Saw a more moderate decrease of 4.5%, bringing the median rent to $1,934.
• Three-Bedroom-Plus Apartments: Rents for these larger units fell 3% to $2,309.

In contrast, studio apartments saw a slight increase of 0.9%, with a median asking rent of $1,617. This anomaly is often due to the lower volume of new studio apartments being built and their tendency to be concentrated in higher-cost urban centers, making their median rent more volatile.

What Can Renters Expect in the Current Market?

The current market conditions present a clear advantage for renters considering a new apartment. With a high volume of new inventory entering the market, prospective tenants are likely to find more favorable terms than in previous years.

Practical advice for renters includes:

• Research New Construction: Focus your search on buildings that have been recently completed or are nearing completion, as owners are often motivated to lease these units quickly.
• Negotiate and Ask for Concessions: Do not accept the listed price at face value. It is often possible to negotiate the rent or ask for move-in incentives.
• Compare Markets: If you are flexible on location, target metropolitan areas that have seen a high level of new construction, as competition among landlords will be fiercest there.

The ongoing pipeline of new apartment constructions suggests that rental prices for new units may continue to soften in the near term. This provides a window of opportunity for renters to secure a modern apartment at a more accessible price point. However, market conditions can vary significantly by city and even by neighborhood, so thorough local research is essential.