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Metro areas in Florida and Texas are seeing rent declines as landlords struggle to fill newly built units, Redfin reported.
During COVID, an overload of pandemic demand burdened housing and rental markets in both states, triggering a wave of construction. But with demand now falling away, rental companies have been left with too many apartments.
In Florida, the city of Jacksonville notched its biggest asking rent decline since 2019, dropping 12.4% in June on an annual basis. Tampa notched a 6% drop, Redfin said, marking its largest decline on record.
Orlando and Miami also joined the trend, with rent falling 4.8% and 3.8%, respectively.
For Texas, Austin was the standout metro. The city's median asking rent dropped a record 12.6% year-over-year, the biggest decrease of all 33 metros tracked by Redfin.
Both states continue to be the country's leading building permitters. Between 2021 and 2023, Austin issued the most multifamily building permits per 10,000 people in the entire US, the report said.
"With so much supply on the market, renters may be able to get concessions like free parking or discounted rent," Redfin senior economist Sheharyar Bokhari said in the report.
Meanwhile, the national median asking rent reached a two-year high — in June, it rose 0.7% on an annual basis, reaching an average of $1,654.
The largest rent hikes are hitting the Midwest and Northeast, given that these regions are not building apartments at the same pace as other parts of the country.
In some ways, the sharp declines seen in Florida and Texas are corrections from rent highs seen during the pandemic, Redfin suggested. For instance, heavy demand caused Tampa's rent appreciation to more than double national growth in 2022.
Redfin previously reported that this has impacted the housing market in both states as well, as COVID-era prices have fenced off many would-be homebuyers. Most metros with falling home prices were located in Florida and Texas, Redfin found in April.
Pushing demand out are rising insurance costs as well. In a spring survey, the firm found that close to three-quarters of Florida homeowners faced climbing insurance costs, given increasing risk of climate damage.
In fact, Realtor.com found that this was a problem shared among Florida, Texas, and even Louisiana. Markets in these states are the nation's "coldest," the agency wrote last month.
