An average American needs to work about 63 hours to earn enough to pay the typical U.S. rent of $2,040. That is three more hours than they would have needed to work a year ago, and six hours more than in October 2019, before the pandemic.
These figures illustrate the growing affordability hurdles renters face, even amid what has been a strong labor market. Average hourly earnings have grown 23% over the past five years, but rents are up 36.9% over the same period.
The rental market has cooled this year, as evidenced by national rent growth decelerating from a record 17.2% annual growth in February to 9.6% year-over-year growth as of October. The typical U.S. rent finally ended a two-year streak of non-stop growth in October, falling 0.1% month over month to $2,040. Rapid rent growth last year squeezed renter budgets when leases expired and renewals came due, prompting some to double up with roommates or move in with family. More vacancies mean more incentive for landlords to price their unit competitively to fill those vacancies quickly, helping ease upward pressure on rents. But to this point the cooling market has meant prices growing more slowly in most of the country, not meaningful dips in rent levels.
The small dip in October has helped the hours of work needed to pay rent fall just a bit to 62.6 hours from a high of 62.9 hours set in August, in data going back to 2015. That dip offers some hope of relief on the horizon, or may at least be a signal that the usual seasonal rhythms of the rental market — hotter in the spring and summer, cooler in the fall and winter — are back. But overall, the cooling rental market has done little to ease affordability burdens for today’s renters.
Suraj Shrestha is an associate at Harborside Partners. He has been taking the lead role on research projects; to develop and implement online marketing strategies for search engine optimization and social media marketing. He is one of the core parts for helping to grow business revenue and the company’s online presence.