Renters being offered discounts and incentives as U.S witnesses construction boom

New York, 14 August 2024: After a significant increase in rent prices during the Covid Pandemic, the United States is witnessing record construction activity this year. According to Zillow Group, an online real estate marketplace, the highest number of family units were constructed in June than in any month in about 50 years.  This has increased supply of rental units with more units available for potential renters compelling landlords to offer rent concessions, discounts and incentives to attract renters. 

Florida and Texas have witnessed the largest scale of construction activity with a large number of newly built apartment buildings driving down rent prices as the supply has exceeded the market demand. Redfin reports that median asking rent price in Austin, Texas, fell about 16.9% YoY, the biggest decline amongst all the metro areas in the national report. Other significant price drops were witnessed in several metro areas, particularly Jacksonville, Florida where prices declined by about 14.3%. 

Experts are of the opinion that the rental market has started to loosen because of yet another factor- the easing of the labour market. The country has witnessed a surge in unemployment recently, jumping to 4.3%. According to the Bureau Labour Statistics, non-farm payroll has seen only a marginal rise this month and wages and salaries have increased by only about 5.1% in June on a year on year basis, far away from its peak of 9.3% in January 2022. There is a direct correlation between wages and housing demand with increased wages resulting in increased demand for housing but the recent loosening of the labour market is driving down rental prices. 

Rent concessions have increased most of the metro years compared to the previous year with 33.2% landlords offering at least one rent concession in July across the United states compared to 25.4% in 2023. These levels, however, are still higher than what they were prior to the pandemic but rent growth seems to have flattened.