Phoenix tenants looking for new digs in the city may notice that prices have inched higher compared to where they were a year ago. The good news is that Phoenix rental prices are among the slowest growing compared to other cities nationwide.

New rental data released from Realtor.com shows that rental prices in the Phoenix-Mesa-Scottsdale metro climbed 4.8% year-over-year in July, sending the overall median rent to $1,755 last month.

However, Phoenix rental prices are experiencing some of the slowest annual price growth among the 50 largest U.S. metropolitan areas, including Minneapolis (3.3%), Sacramento (3.4%), Riverside (4.2%), and Buffalo (6.3%). On the opposite end of the spectrum, the most significant increases in yearly July rental prices were recorded in Miami (26.2%), New York City (25.4%), and Boston (24.8%). This rise was the 10th month that Miami led the way for annual rental price growth.

Realtor.com noted in its report that the supply of available rental units in each market correlates with increases in monthly rent. The five metros that experienced the slowest rent growth saw their vacancy rates increase by an average of 0.4 percentage points from Q2-2021 to Q2-2022. Similarly, the five metros with the fastest growing prices saw their rental vacancy rate drop by an average of 1.2 percentage points over the same period.

The Phoenix metro recorded rent growth across all bedroom types in July. The median cost of a studio residence increased the most compared to one- and two-bedroom units, rising 8.3% year-over-year to $1,415. The median price for a one-bedroom rental rose 4.8% annually to $1,609 in July, while two-bedroom listings increased 2.6% yearly to a median of $1,925.

National median rent sees smallest monthly price growth in 2022 to date

Although rental prices continue to rise, their pace of growth has noticeably slowed.

In Realtor.com’s analysis of the biggest U.S. metros, the national median rental price increased only $3 from June to $1,879 in July. While this breaks the record for the highest national rent for the 17th consecutive month, this slight monthly increase also signals a slowdown in rental growth.

“This was the smallest month-to-month growth in 2022 thus far, and the lowest year-over-year rent growth since August of last year,” said the rental report authored by senior economic research analyst Joel Berner, and chief economist, Danielle Hale. “Rent is finally leveling off, with growth quickly sliding nearer to a sustainable equilibrium level as it has been since January.”

Compared to July 2021, the national median rental price is up 12.3%.

Urban rental prices take the lead over suburban markets

When renting in the suburbs versus urban communities, the price gap between the two widened in July.

In four of the five markets where rent is growing the fastest on an annual basis, Realtor.com said that rents for units located in urban areas are growing faster than rents in suburban parts of the metros.

In early 2020, suburban and urban rents grew at approximately 3% yearly. A year later, urban rent dropped 2.5%, while suburban rental prices rose 3.9%. Since then, the gap has “shrank and shrank until it finally converged” in Q2-2022. In July, urban rent grew 12.8% compared to 11.7% for suburban rentals. With the urban rent posted at $1,928 compared to $1,821 in the suburbs, urban prices now come with a 5.8% premium as of July, up from 4.9% in July 2021.

“Big cities are getting back to in-person work; bars, restaurants, and event venues are back in full swing; and the mid-pandemic focus on renting in the suburbs to take advantage of remote work is beginning to subside as the social appeal of big-city life is coming into focus again,” said Berner and Hale’s report.

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