In August, median rent in the 50 largest cities fell 0.6% to $1,752 per month. That's also down $7 from July and $25 from 12 months ago, according to the latest report from Realtor.com®. This is the fourth consecutive month of year-over-year rent declines for studios, one-bedroom and two-bedroom properties.

While monthly rents are falling, Realtor.com economist Jiayi Xu emphasised that rents are still higher than pre-pandemic levels. The report shows that the cost of renting in August was 23.7 per cent higher than four years ago.

This means that rent affordability remains one of the biggest challenges for renters, especially for those on low incomes, she said.

The report looked at rents for studios, one- and two-bedroom flats, condos, townhouses and single-family homes in the 50 largest cities. (Large cities include main cities and surrounding towns, suburbs and smaller urban areas.)

Nationally, Xu said, the drop in rents was expected because there are more rental properties on the market. Builders are constructing many new apartment buildings because people who have been priced out of housing are renting. She expects this trend to continue until at least the end of 2023.

Nationally, metropolitan areas where rents spiked during the COVID-19 pandemic, including Austin, Texas, Phoenix, and many markets in Florida, saw the largest declines in rental prices.

Austin saw the largest drop in rents, down 8 percent year-over-year in August. It was followed by Tampa, Florida (-5.5 per cent); Dallas and Raleigh, North Carolina (both -5.4 per cent); Portland, Oregon (-5.2 per cent); San Francisco (-4.9 per cent); Orlando, Florida and Riverside, California (both -4.8 per cent); Las Vegas (-4.6 per cent); and Phoenix (-4.5 per cent).

"Sellers are so used to the fair value of their homes being inflated that they won't sell their homes for less than they did during the frenzy," said Stephanie Douglass, co-founder of Open House, an Austin-based real estate brokerage firm that focuses on first-time homebuyers.

Instead of lowering prices, sellers are renting out their properties, which has flooded the rental market.

The extra inventory of rental properties helps lower home prices. Size is also a factor.

Prices for more expensive two-bedroom units fell the most. prices fell 0.7 per cent year-over-year in August, to a median of $1,948 a month.

Prices for one-bedrooms fell about 0.5 per cent to $1,634 per month, while studios saw the smallest drop of 0.2 per cent, with rents falling to $1,463 per month.

The Midwest and South, known for their affordability, saw the largest rent increases.

The region with the largest increase was New York City, which was once empty during the height of the pandemic. Since then, rents in New York City have rebounded, rising 6.5 per cent to a median rent of $3,097 per month.

Most of the other rent increases were in the Midwest, as people sought savings and more affordable housing.

Cincinnati had the second highest increase at 6.2 percent. It was followed by Richmond, Virginia (5.9 percent), Washington, D.C. (4.9 percent), Louisville, Kentucky (4.4 percent), Milwaukee (4.3 percent), Indianapolis (3.9 percent), Oklahoma City and Pittsburgh (both 3.4 percent) and Detroit (3.3 percent).

People are moving from expensive markets to the more affordable Midwest," Hsu said. Right now, rents are growing very fast in the Midwest."