Renters got some good news this week: Rents have dropped nationally for the first time since early 2021, according to data from both Realtor.com and Apartment List. Asking rents are now about 1% lower than they were a year ago. 

While a 1% drop in rent may not sound like much, Apartment List chief economist Igor Popov said it’s actually pretty significant.

“At the end of 2021, we were tracking rent growth on the order of 17% nationally,” he said.

So, to go from that to a 1% drop? “It’s dramatic, in context,” Popov said.

Now, to be clear, rents aren’t coming down everywhere. They’ve come down most in the West and some in the South, according to Danielle Hale, chief economist at Realtor.com.

But “we’re still seeing rents grow in the Northeast and the Midwest,” she said. “They are slowing, but they continue to increase.”

In the Northeast, that seems to be largely because the job market is so strong right now, Hale added. And in the Midwest, rents are still relatively affordable. This means they have more room to grow than in other parts of the country — parts of the country where “rents are very close to long-term highs, and affordability has become a problem,” said Hale.

And that’s one reason rents are slowing and even dropping now in some places: They’ve just gotten too high.

“They’ve risen a lot faster than incomes have,” said Lisa Sturtevant, chief economist at Bright MLS.

Another reason rents are coming down is that more supply is coming online, she said.

“We’ve been thinking about home prices and rents rising and what can we do to improve affordability for folks,” she said. “And, frankly, the only solution is to increase the amount of supply out there.”

That’s finally happening, but Sturtevant cautions that it could be short-lived, as the Fed’s interest rate hikes are making it harder for a lot of builders to get financing.