According to the latest report from Realtor.com, the median monthly asking rent fell 1 per cent to $1,759 in July compared to a year ago. Monthly rents were $1,445 for studios and $1,642 for one-bedrooms.

The drop in rents is likely good news. The U.S. economy has been struggling with high inflation, which is largely driven by rising housing costs. The US Federal Reserve has raised its benchmark interest rate 11 times in the last 12 consecutive policy meetings to curb rising inflation.

However, rents have yet to fall to pre-pandemic levels. Compared to July 2019, rents in July 2023 have risen by nearly 25 per cent.

Two-bedroom units saw the largest annual increase in rents. The median rent for a two-bedroom unit is $1,948, up nearly 27 percent from July 2019.

Renters in many areas are now spending slightly less on rent relative to their overall incomes, giving their budgets more breathing room in the face of stubborn inflation and continued affordability concerns.

The data shows an increase in construction of multifamily housing, including townhouses and condominiums, and a rise in vacancy rates, Hale added. We expect the downward pressure on rent prices to continue, which will provide much-needed stability in housing expenses for many renters.

Overall, rents have become more affordable this summer, with the average household income renter spending only about 26 per cent of their income on rent in July, down from 26.5 per cent the previous year.

This positive change can be attributed to a drop in median rent and a rise in median household income, the report said.

The Midwest is the most affordable market for renting, led by Oklahoma City, where renters spent only about 18 percent of median household income on housing in July.

The most unaffordable markets for renters include Miami, Los Angeles, San Diego and New York City. In Miami, where the median monthly rent was $2,455 in July, renters would have spent 44 percent of their monthly wages on rent in July.

In New York City, where the median monthly rent was $2,859 in July, renters will spend 37 percent of their income on rent, Realtor.com said.