Is the tide turning for renters? Manhattan rents DROP for the first time in two years to $4K a month - as costs to lease a home across the country plummet by largest amount since 2020

Manhattan rents have dropped for the first time in over TWO years - as a glut of empty appartments force owners to cut costs in the New York City borough. 

The average rent in Manhattan, which is the most expensive place to lease an apartment in the US, fell 2 percent year-on-year in November to $4,000, according to a report from Douglas Elliman and Miller Samuel. 

While slight, this decline from $4,095 the year before marks the first time prices have fallen in 27 months, the report said. 

Meanwhile, a separate report from real estate company Redfin painted a similar picture for the US market as a whole. Rents made the biggest drop in over three years to November, amid a recent boom in vacancies.

Declining rents in Manhattan, the nation's largest market, could have significant implications for prices across the country, and the overall rate of inflation, experts say.

Economists had predicted that New York City's red-hot rental market could be reaching its peak when tight supply pushed up costs to a record high of $4,400 in August. 

'Prices hit an affordability threshold and this is the reaction,' Jonathan Miller, CEO of appraiser Miller Samuel, said.

As a result of the price decline, there has also been a 9.7 percent annual rise in new lease signings in Manhattan - and landlords are beginning to offer concessions to lure in renters. 

This increased to 14 percent from 12 percent in October, according to the report. 

Despite this, Manhattan rents remain notoriously elevated - and 11 percent higher than before the pandemic. 

The average rent also fell 2 percent, but remains at $5,150 a month. 

The fall in Manhattan rents appears to be part of a wider trend - with rent across the US also falling to November. 

According to Redfin, the typical US asking rent declined by 2.1 percent year on year in November to $1,967 - the biggest annual drop since February 2020.

More apartments have appeared on the market since last year, the real estate company said, as a result of a building boom in recent years. 

This jump in supply has left many landlords struggling to fill vacancies, motivating them to drop asking rents in some cases. 

Some landlords are offering one-time discounts like a free month's rent or reduced parking costs to attract renters. This means the prices renters are paying in total are likely coming down faster than they appear to be in the data. 

There are also new signs that the economy is slowing; Americans are starting to tighten their belts, which could be contributing to the decline in rents, said Redfin Chief Economist Daryl Fairweather.

While rents are dropping, they are still 22.1 percent higher than they were in November 2019 before the pandemic housing boom, and are just 4.2 percent below the $2,054 record high hit in August 2022.

'Renters are finally catching a break,' said Fairweather.

'Better deals are easier to come by because landlords are doling out concessions and rents have started falling in a meaningful way. Rising supply also means renters have more good options to choose from. With homeownership so expensive, renting has started to lose its stigma. 

Fairweather predicted that home sale prices and mortgage rates will begin to tick down next year - and we may see more renters jump into the homebuying market as a result. 

While the average 30-year rate has edged down to 7 percent in recent weeks, rates were approaching 8 percent earlier this year. 

According to latest data from Government-backed lender Freddie Mac, the average 30-year fixed-rate mortgage has dipped below 7 percent - to 6.95 percent - for the first time since August. 

But historically low inventory - coupled with high mortgage rates and house prices - have meant that housing affordability for buyers has hit a near-40 year low. 

Among the four major US regions, Redfin said, the median asking rent only went up in the Midwest.

Asking rents in the region rose 4.6 percent year-on-year to November to $1,434, partly due to out-of-towners moving in to get a better deal for their money. 

Asking rents fell 1.8 percent year over year to $2,347 in the West, were little changed in the South - down 0.4 percent to $1,635 and were unchanged in the Northeast at $2,447.

Rents are climbing in the most affordable region and falling fastest in one of the least affordable, Redfin said, which makes sense at a time when housing affordability is so strained.

Researchers in both reports used the median measure of average - the middle number in all the rental amounts when arranged from high to low. Using the mean - which would involve adding up all rental values and dividing that figure by the number of properties - is affected by particlulary high prices, for example for mansions, that drag the average up.