While incentives remain an integral part of the new home market, they are falling out of favor in the rental sector as demand and competition increase. The number of rental homes offered on Zillow has been struggling, falling from 32.7% in December to 31.9% in January. The preferential rate increased 5.6% annually to 32.2% in February; however, this was the slowest annual growth rate since June 2023.
Attend Inman Connect in Las Vegas July 30-August 1! Seize the moment and take control of the next era of real estate. Through immersive experiences, innovative formats and an unparalleled lineup of speakers, this gathering becomes more than just a conference, it becomes a collaborative force shaping the future of our industry. Grab your tickets now!
While incentives remain an integral part of the new home market, they are falling out of favor in the rental sector as demand and competition increase.
The number of rental listings with discounts on Zillow declined, from 32.7% in December to 31.9% in January. The preferential rate increased 5.6% annually to 32.2% in February; however, this marked the slowest annual growth rate since June 2023.
Zillow economic research data scientist Anushna Prakash said rental concession rates will continue to decline throughout the summer and spring as lease signings and renewals reach their annual peaks.
Anushna Prakash
“The rental market always ebbs and flows with the seasons, so it’s not surprising that we’re seeing offers start to level off as we head into the warmer months,” she said in the report. report released on wednesday. “It appears we are starting to see the market balance between continued high demand from renters and a competitive environment for property managers and landlords.”
Renters are most likely to find incentives, such as a free month’s rent or waived parking fees, in markets in the South and Midwest.
Salt Lake City has the largest share of preferential rents (60.3%), followed by Austin (55%); Charlotte, NC (53.5%); Dallas (50.7%); Raleigh (50.6%); Nashville (49.9%); Washington, D.C. (49.4%); Minneapolis (49.4%); Phoenix (48.8%); and Denver (48.1%).
Annual rent growth is also slowing in most of these markets, with Austin being the only exception as rents are 3.0% lower than in February 2023.
On the contrary, rent growth in metropolitan areas with the lowest rental discount ratio also exceeded the national average (annual increase of 3.5%).
In February, only 12% of Providence landlords offered incentives, and average rents increased 8.1% annually. The second and third least favorable markets — Hartford, Connecticut (16.3%) and Cincinnati (18.9%) — saw rents increase by 6.4%.
Prakash said that although it is becoming increasingly difficult to find attractive incentives, tenants can still find deals in new construction. “While offers are starting to taper off, they are more prevalent than a year ago, helped by new building openings,” she said.
Email Marianne McPherson
