National Rents Hit Biggest Drop Since 2017 — Here’s Why the Twin Cities Is Different

Spring is usually a great season for housing providers. They not only get a reprieve from the snow, but also it’s the time of year when rents generally rise.

According to a report from ApartmentList, however, the national median rent rose by just 0.4% between February and March, to $1363. Last year the increase was 0.6%.

Nationally, rents were down 1.7% on an annual basis; the largest decline since 2017. Median rent nationwide has declined 2.2% since 2022.

The good news is that the Midwest has fared slightly better than the rest of the nation.  Apartments.com reported rent growth of 1.9% in March, which lead the nation. Meanwhile, rents in the South dropped 1.3% and 2.2% in the Mountain region.

The Twin Cites strongest rent growth was lead by the suburbs, with projected annual increases of 3-5% due to limited new supply and high demand.

While annual projections for Minneapolis and St Paul are positive, March saw decreased rent in several unit types.  According to a report from Housinglink, the median rent for a 1BR in Minneapolis fell 4% to $1100. Two bedroom units saw a 2% decline to a median of $1463 from $1495. Bucking the trend, three bedroom units saw a 2% year-over-year increase to a median of $1950 in February.

Median rents have fairly consistently increased in St Paul since the implementation of rent control. Last month, however, rent for one bedroom units stayed flat, dropping just $4 to $1095. Two bedroom units sawa 3% decline to $1425. Like Minneapolis, three bedroom units saw an increase; in this case, 5% to a median of $1944 per month.

Of Minneapolis’ citywide vacancy rate, 15% were found in condos, duplexes or townhomes. This represents a 3% decline. St Paul saw a 1% increase, rising to 15%. In all, 17.7% of St Paul’s rental housing stock is found in one or two unit buildings, while in Minneapolis, those smaller buildings represent 19.7% of the total rental market.

With very few new construction units set to hit the market in the Twin Cities this year, expect these rent decreases to stabilize and even reverse themselves. As we move into warmer weather, most predict the Twin Cities rental market will once again continue to buck the national trend with declining vacancy rates and rising rents.