Austin Rental Market Shows Softening Prices and Leasing Activity in 2024

The Austin rental market is experiencing notable shifts as leasing activity and rent prices decline year-over-year, reflecting changing dynamics in supply, demand, and affordability. Data for the year 2024 highlights key trends that renters, landlords, and market analysts need to consider as they assess the current state of the market.

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In December 2024, the total number of leased residential properties dropped to 1,914, marking an 8.2% decrease compared to November when 2,084 properties were leased. This continued decline caps off a year-long trend of softening rental demand, particularly noticeable in the final months. By contrast, leasing activity peaked earlier in the year, reaching 3,244 properties in July 2024, before steadily declining through the fall.

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Average rental prices also reflect this downward trend. In December 2024, the average leased price stood at $2,330, a 1.1% increase from November's $2,305 but still a 2.1% decrease year-over-year compared to December 2023's average of $2,379. The median leased price in December fell slightly to $2,100, holding steady month-over-month but representing a 2.3% decline year-over-year. Throughout 2024, median prices fluctuated but ultimately trended downward, with the year starting at $2,195 in January before seeing modest peaks and steady drops into the winter months.

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The most significant declines occurred in the late summer and early fall. For instance, in September 2024, the average leased price dropped to $2,296, a 2.9% month-over-month decrease and a 6.0% year-over-year drop from September 2023’s $2,442. Leasing volume in September also saw a sharp drop to 2,437 properties, a 20.8% decline compared to August’s 3,076 properties. These numbers reflect a critical shift in tenant demand, possibly due to rising rental inventory and ongoing affordability challenges.

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Historically, the Austin rental market sees peak activity during the summer months, with rents stabilizing or softening as fall and winter approach. This pattern held true in 2024, with average rent prices peaking at $2,520 in May and June 2024, before steadily declining to the December low of $2,330. Leasing volume followed a similar trajectory, with summer months like June seeing 3,053 leases, an 11.0% increase month-over-month, while the final quarter saw consistent declines.

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The leased-to-list price ratio remained strong throughout the year, hovering around 99.7% to 99.9%, indicating that landlords have largely maintained their list prices. For instance, in December 2024, the ratio stood at 99.55%, reflecting landlords' reluctance to significantly discount rents despite reduced leasing activity. However, the steady decline in median and average rents suggests that landlords are making smaller adjustments to meet renter affordability concerns.

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Several factors have contributed to the cooling rental market. The increased availability of rental units has led to greater competition among landlords, putting downward pressure on prices. Additionally, economic uncertainties and improved affordability in the home purchase market have influenced some renters to explore alternatives, further reducing demand. Rising living costs may have also driven renters to negotiate lower lease prices or delay moving into new properties altogether.

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As the year comes to a close, the Austin rental market remains in a state of adjustment. Average and median lease prices have fallen compared to the previous year, and leasing activity has slowed significantly, particularly in the second half of 2024. Renters may find this environment increasingly favorable, with opportunities for negotiation and greater flexibility. Landlords, on the other hand, face the challenge of staying competitive while adapting to evolving market conditions.

Looking ahead to 2025, the Austin rental market will likely continue to balance supply and demand. For landlords and investors, monitoring pricing trends and adjusting expectations will be essential to remain competitive. For renters, the ongoing market correction could provide continued opportunities for affordability and flexibility​