Renters are getting benefits as the construction boom eases supply, Zillow says

American tenants win concessions when they sign new contracts, an indication of this rising apartment construction ease supply shortages, a new report shows blog post from Zillow.

According to Zillow, about 60,000 multifamily homes were completed nationwide in June, more than any month in the past fifty years. That prompts owners to offer concessions ranging from parking privileges to weeks of free rent. Zillow said the share of listings on its platform offering such concessions was 33% last month, up from 25% a year earlier.

“Builders have stepped up and built an incredible number of homes in response to rising rents during the pandemic, and renters are now seeing the benefits,” said Skylar Olsen, Zillow’s chief economist. “A slowing labor market and lower mortgage rates could mean falling rents if current trends continue.”

Housing has been one of the top contributors to post-pandemic inflation, and further improvement in rental supply should help lower nominal interest rates and strengthen the Federal Reserve’s case for lower interest rates. National shelter inflation eased to 5.4% in June, down from a peak above 8% last year.

In some major metropolitan areas – especially southern and western cities, including Atlanta, Phoenix and Austin – more than half of rental properties on Zillow offer a concession.

The number of multi-family homes under construction reached a record last year. Although the figure has since retreated, June’s figure was still higher than at any time since the early 1970s.