Renters across the U.S. have something to cheer about: Rents fell in November, making it a little more affordable for many — especially those earning the minimum wage.
In the 50 largest metros, the median rent was $1,703—down $17 from last month and $57 from its peak in August 2022, according to a new Realtor.com® report.
The median rent for 0-2 bedroom properties fell $19 year-over-year, or 1.1%, marking a hopeful trend in rental affordability.
“As the rental market has cooled, rents have fallen for 16 consecutive months nationwide,” Realtor.com economist Jiayi Xu says in her analysis.
But how much relief will this drop bring to renters, especially in cities where affordability remains a challenge? It could be essential, given that the minimum wage will increase in 2025.
Nationwide rent decline
Renters saved last month across the board, with smaller properties seeing the largest percentage of rents fall.
The median rent for studio apartments fell 1.6% year-over-year to $1,423, down $67 from its peak in October 2022.
One-bedroom units saw median rents fall 1.2% to $1,585, $73 below their peak in August 2022. And rents in two-bedroom units fell 1.1% to $1,886, $75 less than their high in August 2022.
Despite these declines, Xu’s analysis finds that rents have increased significantly since before the COVID-19 pandemic. However, the increase is not as dramatic when compared to other economic changes at the same time.
For example, while the typical rent in November 2024 was $261 (18.1%) higher than in 2019, overall consumer prices rose 22.7% over the same five years.
Taking a broader view of housing costs, Xu notes that rent growth “pales in comparison to the 49.7% increase in the average price per square foot of home listings for sale in the five years ending in November 2024.”
Starting in January. 1, 2025, minimum wage increases in 23 of the top 50 metros are expected to bring much-needed relief.
Minimum wage workers struggle with affordability
Even with lower rents, minimum wage earners face an uphill battle when it comes to affording housing.
The November rent report found that minimum wage renters still have to spend significant hours in cities with the biggest rent reductions to afford a typical 0-2 bedroom rental.
To come up with its findings, Realtor.com’s data team analyzed how many hours a minimum wage earner needed to work to afford a typical 0-2 bedroom rental in November. Using the 30% rule for housing affordability, the team calculated the required annual income and determined the required weekly hours. The analysis assumed that two tenants split the rent equally.
In 8 of the 10 markets analyzed, two minimum wage workers sharing rent would still need to work more than 40 hours a week to keep housing costs within 30% of their budget – especially in areas where the minimum wage is blocked in federal. rate of $7.25 per hour.
The best and worst cities for minimum wage workers
Nashville, TN, and Austin, TX, top the list in the most hours minimum wage earners must spend to afford the typical rent. Paying rent in these cities requires two minimum wage workers to not only split the rent, but also work 82 and 79 hours a week, respectively, to make the rent each month.
“Affordability remains a significant challenge in rental markets, especially for low-income groups,” notes Xu.
In cities like Denver and Phoenix, however, two minimum wage earners working less than 40 hours a week can afford a typical 0-2 bedroom.
In Minneapolis and Seattle, they must work roughly 37 hours a week to cover the cost of a similar rental unit.
“The significant disparity in the hours of work required to make ends meet in Seattle, Nashville, and Austin is largely due to differences in minimum wage laws,” Xu says.
“For example, Seattle has its own minimum wage law, setting the minimum wage at $19.97 an hour. In contrast, Tennessee does not have a state minimum wage law, so the federal minimum wage of $7.25 an hour applies.
Relief on the horizon for some cities in 2025
If rents remain in line with November 2024 levels, minimum wage earners in eight markets will see at least a two-hour reduction in weekly hours needed to afford rent.
“This relief is led by St. Louis, MO and Kansas City, MO,” says Xu.
In these two areas of the Midwest, minimum wage workers will save roughly four hours of work per week after the minimum increases to meet rent.
For cities like Minneapolis and Seattle, where higher minimum wages already allow renters to cover costs within a 37-hour work week, future increases could further reduce the monthly wage.
“With minimum wage increases planned in more markets throughout the year and a projected 0.1% year-over-year decline in average asking rents for 2025, these changes could provide more relief for minimum wages,” says Xu.
What the decline in rent means for the future
The steady decline in rent is a win for renters and a positive indicator of broader economic trends.
“The relative stability of rents should translate into slower housing inflation in the coming months, mitigating one of the biggest recent drivers of a rising price floor,” Xu says.
This is especially critical since housing costs make up a significant portion of the consumer price index.
However, challenges remain. While lower rents combined with minimum wage increases provide relief in some areas, the pace of affordability improvements varies significantly by region.
In markets where the federal minimum wage of $7.25 an hour persists, many renters will likely continue to struggle.
“While the average asking rent in Seattle is nearly 30% higher than rents in Nashville, the hourly earnings of a minimum wage worker in Seattle are 175% higher than that of a minimum wage worker in Nashville, Xu says. “This significant wage differential allows Seattle workers to afford housing with fewer hours, despite higher rents.
“Even in markets with higher state or local minimum wage laws, such as San Francisco, CA and San Diego, CA, work hours beyond a full 40-hour work week are required.”
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