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Apartment rent prices fall 1.4% month-over-month in December

Yahoo Finance reporter Rebecca Chen details the slowdown in rent growth and what it says about the state of the rental market.

Video transcript

[AUDIO LOGO]

DAVE BRIGGS: Renters may finally get relief in '23 as the housing market is expected to continue cooling in the coming months. The national median rent dropped for the fourth consecutive month in December, with overall prices down 3% since August. Here to explain is Yahoo Finance's personal finance reporter Rebecca Chen. Rebecca, nice to see you. So what can renters expect to see in '23?

REBECCA CHEN: Yes, so in 2023, most experts are believing that rent will drop and renter can expect some kind of relief. In December, we did see four consecutive straight months of rent declining. And that is probably one of the biggest drop we've seen since July, 2017, almost five years ago.

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And as you can see, there's really two reasons why experts believe that rents could drop in this coming year. And the first is really many of them are predicting some kind of recession, even if mild one. A mild recession can have this effect, impact on rent. Unemployment could go high, and people could be saving more or more conscious of their budget.

And there is another reason why experts are seeing some kind of relief coming in 2023. And that is the fact that there could be more inventory coming online for many of the cities in the United States. Construction activities has gone up in certain cities. And as that supply grows, we could see rent coming down for many in 2023.

SEANA SMITH: And Rebecca, despite that, despite the fact that we are expected to see a drop here in rent on a nationwide basis, there are still certain cities, Salt Lake City, for example, where rent continues to climb. What's behind that?

REBECCA CHEN: So some cities, we are seeing cities where rent is still climbing even in today's market. And it could just be because they're a little bit behind. They're still a little bit delayed reading the economic outlook. One of the agents that I have talked to, though, does say that, in certain cities, where traditional markets that are more popular with jobs, those cities are making a comeback now that pandemic is behind us.

So somewhere like Los Angeles could be seeing a rental, maybe not drop, maybe staying somewhere the same or even raise a little bit, just because people are coming back into the office. And supply has not been solved in cities like this. So even though we are expecting an overall drop in rental prices in 2023, we could see a couple places where renters are still going to see a little bit of that crunch there.

SEANA SMITH: So not everyone will get that relief that they are hoping for. Rebecca Chen, great stuff. Thank you.