Rent prices are changing thanks to 'apartment-building boom' – what renters should expect

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Rent prices are changing thanks to an "apartment-building boom," with many landlords lowering monthly costs, according to Redfin chief economist Daryl Fairweather.

In 2023, median monthly rent prices hit a high of over $2,000, "mainly due to high mortgage payments that pushed potential buyers into the rental market instead," Fairweather told FOX News Digital.

"However, prices have since changed due to an apartment-building boom," she continued. "There are many vacant properties right now, and the supply jump has caused landlords to lower prices."

In November, median monthly rent prices were $1,967, according to data from Rent.com. Within the past 12 months, rents peaked in August 2023 at $2,052, the data shows.

Many Americans moved around the country during the pandemic, which drove up rental costs, according to Fairweather. But she noted how that trend has since slowed.

"People were also moving at a rapid rate during the pandemic, so rentals were in high demand," Fairweather told FOX News Digital.

Other factors driving lower rent prices in the US

FILE - The view inside of a condo on Jan. 26, 2024, in Boston, Massachusetts. (Photo by Suzanne Kreiter/The Boston Globe via Getty Images)

Other factors that have contributed to lower rent prices include economic uncertainty and slower-growing household formation, Fairweather said. The term household formation means the change in the number of households – i.e., persons living under one roof or occupying a separate housing unit – from one year to the next.

"Household formation slowed in 2022, which tempered rental demand after the pandemic moving frenzy," she told FOX News Digital.

The cause of that "pandemic moving frenzy" was partially because of the economy but also because "factors like inflation and high interest rates all discourage household formation," the economist said.

"Despite more recent improvements on inflation and a strong jobs market, consumer sentiment remains low," Fairweather told FOX News Digital. "Redfin expects that to improve once the Fed cuts rates again."

The Federal Reserve is expected to cut interest rates in 2024. While Chair Jerome Powell recently told reporters that a March rate cut is likely off the table, some economic experts predict that the Fed will change course in May.

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Meanwhile, many Gen Z Americans have not been immune to housing challenges. This generation, defined as those born between 1997 and 2012, has suffered under "stagnant homeownership rate[s]" between 2022 and 2023, according to Fairweather.

"Just over one-quarter of Gen Zers owned a home in 2023, so renting is the reality for most of that generation," she explained. "However, there’s still a lot of hope for Gen Z: They are still outpacing young people of the past when it comes to homeownership."

Many Gen Z homeowners bought during the pandemic when mortgage rates hit historic lows, which made entrance into homeownership "more feasible at a young age," the economist said.

FOX Business contributed to this report. It was reported from Cincinnati.