Over the past four decades, average rent prices have outpaced wage inflation by a significant margin after rising around 8.85% each year.

In both 2021 and 2022, the rental market went through intense periods of volatility. Predictions suggest that this year will be similar. However, rent-price increases have started to slow down.

Based on the latest data, these are the main highlights:

  • The national average rent increased 18% year-over-year (YoY) from 2021's first three months to last year's first quarter.
  • The average monthly rent-to-income ratio is 45.0%.
  • In August 2022, the nationwide average monthly rent was $1,388.
  • Just one year before, in July, the 50 largest Metropolitan US areas had a median rent of $1,879.
  • Almost 78% of renters pay rent in full on their exact payment dates.
  • The projected average monthly rent for 2023 is $1,180 (Fair Market Rent – ​​FMR) after an average annual change of 8.96%.
  • Prices for one-bedroom rentals fell 0.3% in January this year.
  • Prices for two-bedroom rentals have remained the same compared to previous months.

Average Rent and Median Rent Been Each Year

The US Department of Housing and Urban Development (HUD) develops and reveals statistics to determine payment standards for different housing programs.

These figures are known as Fair Market Rents (FRMs), with standard payments between 90% and 110%, and represent how much a moderately-priced property or dwelling unit costs on the local rental market.

However, the FMR doesn't establish the price that the average renter pays for a dwelling unit in the US. Considering that information, here are other important facts:

  • Experts say that the expected average monthly rent for this year is $1,180 (FMR) after an 8-96-percent annual change.
  • As of mid-2022, the national monthly rent average was $1,388, while the median rent was $1,083.

Variations Year Over Year

In addition, statistics have also shown significant variations over the years. The median rent grew at a 3.15-percent annual rate in the 21st century, for example.

Within the 2010-2020 period, 2011 was the year with the highest YoY rental inflation rate, reaching 643.5%. However, it has not been the largest increase in the last century.

Considering the last 50 years, the highest YoY rent increase was reported in 1980, when it reached 11.98%. Additionally, 1920 saw the highest annual rental price margin of all time at 18.42%.

The smallest YoY decrease in the last 50 years, 0.25%, was reported in 2010, but the all-time largest decrease was in 1933 when the rent price was at -13.48%. Since 1934, YoY rent has not fallen to another negative rate.

When the pandemic hit the country, causing a health and economic crisis, many companies reported massive job losses and the country's unemployment rate rose sharply. It reached 14.7% after the biggest month-on-month rise in history in April of that year.

Inflation has also had an impact on rental prices. With currency values ​​increasing at an annual rate of 2.5%, rent inflation is around 3.2%.

Based on the rental price per square foot, the average annual rent was $20.28 per square foot, totaling $17,887.

Finally, in January this year, the average rent price was $1,463, accounting for a 3-percent increase compared to the previous year.

Median Household Income Vs. Median Rent by Year

Since housing and amenities have also changed a lot over the last few decades, measuring rental inflation accurately is challenging.

However, the rent-to-income ratio suggests that the prices renters often pay for a dwelling unit rise faster than the median household income.

Recent nationwide data showed that full-time workers earn $1,045 per week or $50,160 per year on average before taxes.

However, statistics show that the average renter spends at least 45.0% of their income to pay rent. In other words, most people can only use 55% of their household income to cover other expenses.

Also, female wage earners seem to spend more. Such statistics showed that women take up around 49.8% of their individual income to pay the rent.

However, the average rent per year has increased much more than the median household income. Around 10 years ago, the average rent compared to people's salary was 22.85%.

Only eight years later, in 2020, people were spending almost 50% of their household income to pay rent. In other words, the average rent price in relation to average monthly or annual wages (rent-to-income rate) has increased by 24.25% in the last decade. It represents a growth rate of 9.69%.

In contrast, the average wage value has risen to an annual rate of only 3.12%. As statistics show, rent prices increase 1.94% faster than the median household income.

The last two years have been slightly different. In 2021, the rent inflation rate was 4.48%, while the wage inflation rate was 5.91%. Last year, the trend also took a slight turn, with rent inflation reaching 4.48% and wage inflation at 5.91%.

How's the Median Monthly Gross Rent?

Using official median household income data collected through a Census ACS survey, which considers the estimated average monthly cost of utilities, the median monthly gross rent as a portion of a renter's income was around 20.03% five years ago.

Considering that the rent-to-income ratio has increased by almost 10% in the last two years, the median monthly gross rent could have doubled between 2020 and 2023.

However, this estimate may vary depending on the group studied, average monthly or annual income after taxes, city or location, and type of housing.

How Has It Been in Each State?

Rental rates per state.

Based on what the country's history has shown, Southern states typically have the lowest rental rates.

The two states with the highest rent rates are Alaska and Hawaii, which have held that spot since the mid-20th century.

According to 2022 statistics on the average rent by year in each state, these are the most important data:

  • While Hawaii had the highest rents in the 2000s, Alaska's rental prices were the highest nationwide in the 1980s.
  • At just $738 for a two-bedroom unit, Arkansas has the country's lowest FMR.
  • Considering all US states and territories, Puerto Rico has the lowest FMR at $487 or 34%, which is below the FMR in Arkansas.
  • In 1940, the District of Columbia had the country's highest rents.
  • Mississippi had the lowest rent in 1940.

Rent Price By State

The latest figures show that these are the rent prices for each state:

  • Alabama – 2022 Media Gross Rent: $829 (FMR) 
  • Alaska – 2022 Median Gross Rent: $1,313 (FMR)
  • Arizona – 2022 Median Gross Rent: $11,16 (FMR) 
  • Arkansas – 2022 Median Gross Rent: $752 (FMR) 
  • California –2022 Median Gross Rent: $1,677 (FMR)
  • Colorado – 2022 Median Gross Rent: $1,304 (FMR)
  • Connecticut – 2022 Median Gross Rent: $1,428 (FMR)
  • Delaware – 2022 Median Gross Rent: $1,179 (FMR)
  • Columbia – 2022 Median Gross Rent: $1,973 (FMR)
  • Florida– 2022 Median Gross Rent: $1,174 (FMR)
  • Georgia– 2022 Median Gross Rent: $933 (FMR)
  • Hawaii – 2022 Median Gross Rent: $2,036 (FMR)
  • Idaho – 2022 Median Gross Rent: $974 (FMR)
  • Illinois – 2022 Median Gross Rent: $876 (FMR)
  • Indiana – 2022 Median Gross Rent: $862 (FMR)
  • Iowa – 2022 Median Gross Rent: $832 (FMR)
  • Kansas – 2022 Median Gross Rent: $828 (FMR)
  • Kentucky– 2022 Median Gross Rent: $795 (FMR)
  • Lousiana– 2022 Median Gross Rent: $882 (FMR)
  • Maine – 2022 Median Gross Rent: $1,020 (FMR)
  • Maryland – 2022 Median Gross Rent: $1,391 (FMR)
  • Massachussetts – 2022 Median Gross Rent: $1,770 (FMR)
  • Michigan – 2022 Median Gross Rent: $879 (FMR)
  • Minnesota– 2022 Median Gross Rent: $951 (FMR)
  • Mississippi– 2022 Median Gross Rent: $800 (FMR)
  • Missouri – 2022 Median Gross Rent: $803 (FMR)
  • Montana – 2022 Median Gross Rent: $885 (FMR)
  • Nebraska – 2022 Median Gross Rent: $809 (FMR)
  • Nevada– 2022 Median Gross Rent: $1,158 (FMR)
  • New Hampshire – 2022 Median Gross Rent: $1,286 (FMR)
  • New Jersey – 2022 Median Gross Rent: $1,617 (FMR)
  • New Mexico – 2022 Median Gross Rent: $899 (FMR)
  • New York – 2022 Median Gross Rent: $1,234 (FMR)
  • North Carolina– 2022 Median Gross Rent: $952 (FMR)
  • North Dakota – 2022 Median Gross Rent: $881 (FMR)
  • Ohio – 2022 Median Gross Rent: $847 (FMR)
  • Oklahoma – 2022 Median Gross Rent: $833 (FMR)
  • Oregon – 2022 Median Gross Rent: $1,254 (FMR)
  • Pennsylvania – 2022 Median Gross Rent: $968 (FMR)
  • Rhode Island – 2022 Median Gross Rent: $1,368 (FMR)
  • South Carolina – 2022 Median Gross Rent: $951 (FMR)
  • South Dakota – 2022 Median Gross Rent: $848 (FMR)
  • Tennessee – 2022 Median Gross Rent: $865 (FMR)
  • Texas – 2022 Median Gross Rent: $968 (FMR)
  • Utah – 2022 Median Gross Rent: $1,017 (FMR)
  • Vermont – 2022 Median Gross Rent: $1,130 (FMR)
  • Virginia– 2022 Median Gross Rent: $1,120 (FMR)
  • Washington – 2022 Median Gross Rent: $1,275 (FMR)
  • West Virginia – 2022 Median Gross Rent: $823 (FMR)
  • Wisconsin – 2022 Median Gross Rent: $896 (FMR)
  • Wyoming – 2022 Median Gross Rent: $954 (FMR)

What Happened This Year?

As mentioned, the latest data show that prices have started to slow down this year. However, that gradual cooldown has been evident in states that experienced price jumps during the health crisis.

In Florida, where renters paid exorbitantly high rent prices during the pandemic, every major city is down. The only one that stayed the same was Tallahassee.

The same is true in Arizona. According to January figures, all major cities, except Scottsdale, are down month-over-month.

There's one state that seems to buck the national trend: Nashville. In this city, the rent price for a two-bedroom apartment increased by 6.2%. However, it remains a popular destination among newcomers due to all the benefits it offers, including favorable tax laws and a successful job market.

Curves Seem to Flatten

Among the country's top 100 cities, at least 74% have seen median rent prices for one-bedroom apartments going down or staying the same compared to last year's figures.

Los Angeles, Philadelphia, and San Diego, for example, have reported lower median rent rates month-over-month. In addition, in those cities where rent has risen, the growth rate has also slowed down.

With many people choosing to rent rather than buy properties and the undersupply in most markets, the demand for rentals remains relatively high.

Therefore, although there have been rent changes and rental prices are expected to continue to stabilize, experts don't think they'd stop. Actually, most believe the market will balance again in 2023.

In other words, experts consider that rents will drop slightly during the colder months and increase during peak seasons, including summer and spring. That's what many see as a stable rental market.

What Have Been The Latest Trends?

Based on a monthly basis, median rent increases have occurred in at least half of the country.

Arkansas, Mississippi, North Dakota, Michigan, and Oregon have reported monthly increases of more than 1.90%.

However, four states saw monthly rents decline more than the national median rent. These are Colorado, Missouri, Illinois, and Massachusetts. Also, about 18% of state markets have been down year over year.

States With Highest Rents In January This Year

The following states experienced increases and rapid growth in January, but their trends are down compared to last year's data:

  • Florida (19.7%)
  • Mississippi (18.57%)
  • New Hampshire (18.39%)
  • South Dakota (17.43%)
  • Arkansas (16.50%)
  • Delaware (15.62%)
  • New York (14.81%)
  • North Dakota (14.07%)
  • Tennessee (12.75%)
  • Alabama (12.50%)

States With Lowest Rents in January This Year

In contrast, some states reported lower average rent by year in January. Most were from the Mountain West, where rents have risen sharply during the pandemic as people searched for better places to self-quarantine.

Idaho had the largest drop among all states at 5.79%, followed by Arizona at 2.64% and Nevada at 2.05%.

  • Idaho (5.79%)
  • Arizona (2.64%)
  • Nevada (2.05%)
  • Virginia (1.77%)
  • Colorado (1.74%)
  • Massachusetts (0.99%)
  • Minnesota (0.44%)
  • Washington (0.12%)

What's Happening With US Cities?

As mentioned, the city with the highest increase was Nashville. Two-bedroom median rent there increased by 6.2% to $1,940. These figures represent an increase of 4% month-over-month and 20% each year.

However, Tennessee residents don't pay income taxes on their wages. Therefore, Nashville is considered the country's leading real estate market.

In California, only two cities are following the trend: San Francisco and Oakland. Rent prices on both have gone down month on month.

However, in most Californian cities, the one-bedroom median rent increased. Although Jersey City, NJ, and Arlington, VA, are not major cities, rents in these commuter towns have risen considerably.

In Jersey City, the median one-bedroom rent is $2,590. It's the fourth most expensive US city to pay rent, even ahead of Miami.

In Arlington, the average rent price is $2,250 for one-bedroom units, leaving this city only one place behind Washington and ahead of Chicago, Seattle, and Scottsdale.

Late Rent Payments

Recent data also shows that most renters pay their monthly fees on time despite the market volatility caused by the pandemic. These are some key highlights:

  • Before the health crisis caused massive layoffs in 2022, 95% of renters used to pay rent within the month.
  • Before the first wave of mass layoffs, over 96% of renters who had not paid rent on time did pay the agreed monthly fee within the same period.
  • Most renters (80%) paid their monthly rent before employment rates fell.
  • Over 77% of renters paid their rent on time after the strict quarantines imposed in the US.
  • When the country began to recover from the pandemic-induced economic downturn and record inflation, more than 94.7% of people with late rental payments paid within the month.
  • After March 2020, over 90% of people paid their rental fee within the month.

Final Thoughts

Since the 1960s, the US economy has undergone major changes. Most have been related to inflation and economic events caused by health and political crises.

The average rent price has risen more than 8% since 1980, from around $200 to over $1,800. Also, compared to the rent price in 1960, the increase has been over $1,700. However, many things can happen in six decades.

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In addition, we share valuable information about the real estate and rental world on our website. Visit our blog, check out our online content, and download our free forms today!

Frequently Asked Questions

How Does Inflation Affect Rental Prices?

Inflation can have a direct effect on rent prices. Actually, data over the years have demonstrated this trend.

If inflation causes good and service prices to rise while the dollar's value plummets, rent prices will soar.

What Factors Make Rent Rates Go Up?

Rent rates tend to go up based on supply and demand. In addition, cities with larger population densities also tend to have higher rental prices.

Inflation and other negative economic events could also have an impact on the market, but this varies depending on different factors.

What Is Gross Rent?

Gross rent is calculated based on the contract rent plus the average monthly utility costs, which include electric, water, gas, and sewer expenses. It may also include fuel-related costs, such as payments for coal, oil, wood, or kerosene.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!