Austin Is Booming. So Why Are Rents Falling?

If you’re a renter, Austin’s housing market is definitely something to envy right now.

By one estimate, Austin’s apartment rent prices are down 23% from their peak in August 2023. That’s according to a Redfin analysis of listings on Redfin.com and Rent.com. The data includes median asking rents for apartment buildings with five or more units. That means a typical Austin renter who signs a lease now is paying hundreds of dollars less per month (roughly $1,393) than someone who signed a lease roughly 18 months ago (when the median was $1,799). It also means costs more closely resemble those seen before inflation started heating up in 2021 and made everything more expensive.

This might sound like a fairytale, given stubborn rent prices in most cities. National data from the same Redfin analysis shows median asking rent has remained basically flat over the past 18 months. While, generally, rent is no longer rising in most places, it isn’t falling either — unless you live in Austin or a handful of other cities, located mostly in the Sunbelt.

The story in Austin shows what can happen when cities address one of the biggest hurdles to bringing down housing prices: a lack of inventory. Cities where rents are falling tend to be the ones where multifamily apartment construction ramped up in the past few years. With more housing options for renters and more vacancies for landlords, the market is tipping in renters’ favor.

Austin, like other hip Southern cities, was a favorite destination of the newly untethered workforce during the pandemic. It’s also seen its share of business expansion. All of that contributed to a population that grew substantially in just a few years — more than 8.5% between 2019 and 2022, according to Census figures.

Then one boom led to another: The city started adjusting to the exploding demand for housing by approving more and more new apartments and single family homes, Redfin senior economist Sheharyar Bokhari told NerdWallet. Annual permitting activity in Austin nearly doubled between 2019 and 2021, according to Census data for those years. And it remained strong in 2022 and 2023 before slowing down in 2024.

Now that many of those apartment buildings are finished and ready to rent, “there’s a lot to choose from,” Bokhari says. As a result, prices are coming down and landlords are offering more concessions — discounts and special deals — as they compete for renters. “From what I gauge, there’s still a lot of people looking to rent there, but there’s even more supply.”

The fact that Austin could add to its rental housing inventory at the rate it has is one of the things that makes it (and other cities like it) exceptional. It’s simply easier to get permits for development there than in major coastal cities, Bokhari says. But, in 2022, nationwide permitting activity for apartment projects reached a level not seen since the 1980s, according to Census data, demonstrating that the building trend is widespread, even if it hasn’t matched Austin’s pace. That building spree has helped to keep rent from rising significantly in the past year, and it’s possible that more cities will see rent prices deflate as more rentals come on the market.

The story in Austin comes with a bit of a warning for renters, as well. When prices fall, and vacancies rise, there’s not much incentive to keep building. As Bokhari puts it: “If you’re seeing that your existing units are not filling up, then why would you want to keep building and making it worse for yourself?”

That’s especially true in the current economic context. High interest rates make development projects expensive. And construction companies likely are considering the potential impact of trade and immigration policy changes under the new Trump administration. Tariffs on foreign imports could raise the cost of building materials, while mass deportations of immigrant workers would reshape the industry’s workforce.

Permitting for new apartment construction has slowed down, which could mean the issue of low inventory will continue to plague markets once today’s new-builds are rented out. It’s not clear how long rent will continue to stay flat or fall around the country, Bokhari says, which means it might be a good time to sign a longer lease if you have the opportunity. “We might be in trouble one year down the road.”