Rents are tumbling in 27 of the US's biggest cities and still rising in 8

• Rents fell 0.1% in August, snapping a 20-month streak of increases, according to Apartments.com.
• Prices fell in 27 of the 40 cities tracked by the firm, signaling the recent price surge is broadly easing.

The housing-market cooldown is finally bleeding over into the rental market.

Over the past few years, a lack of sufficient housing inventory has led to intense buyer competition that has pushed home prices to historic highs. Inflation and interest rate hikes have also put pressure on housing costs, resulting in more Americans having a difficult time affording homeownership.

Although fading buyer demand has led to a decline in home prices, it's had the opposite effect on rents. As Americans become increasingly priced out of homeownership, more have returned to renting, which has caused rental affordability to plummet.

But with the slowdown in the housing market, there is finally some good news for renters. Rents fell 0.1% through August across the US's biggest metropolitan areas, according to new data published by Apartments.com. The drop snapped a 20-month streak of price hikes and offered the first sign of relief for renters stuck with few alternatives.

Rents are still up 7.1% from the year-ago period, but that's an improvement from the 8.4% pace seen at the end of July. Considering the summer and spring are the months that typically yield the largest rent increases, the downturn signals the inflation seen over the past two years is quickly easing up.

"We're seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to now new deliveries outpacing lackluster demand," Jay Lybik, national director of multifamily analytics at Apartments.com's parent company CoStar Group, said in the report.

The cooldown is most pronounced in the Sunbelt cities that saw rents skyrocket the most through the pandemic. Average rents fell 1.1% last month in Nashville, marking the largest one-month decline across the 40 cities tracked by Apartments.com. Austin followed with a 1% drop. Las Vegas, Raleigh, and Orlando joined the Sunbelt cities with significant rent decreases.

Rents in San Francisco slid 0.9% over the month, according to the report. That marked the largest drop in dollar terms, with the dip translating to a $29 decline in the city's average monthly rent cost.

Only 13 of the metro markets tracked by Apartments.com saw prices climb or hold steady through August. Rents gained the most in Orange County, California, with properties hiking monthly prices by 1%. St. Louis followed with a 0.7% gain, and rents rose 0.6% in San Diego.

Prices in northern New Jersey, Cincinnati, Miami, Houston, and Philadelphia were all unchanged through August.

Other data signals housing costs are still broadly on the rise. The Consumer Price Index showed rent costs climbing 0.7% through August, accelerating from the prior month's 0.5% gain. Though the measure includes rents in both rural and urban areas, the uptick hints that rents might not be declining as broadly as the Apartments.com data suggests.

If rents are in fact falling, it will be some time before Americans feel much of a difference. Data from Moody's Analytics shows that since 2020, 89% of the top US metros have experienced an uptick in rent-to-income ratios, meaning renters have had to spend a larger percentage of their paychecks on housing.

"The COVID-19 crisis only exacerbated the challenge to find affordable housing in the US," Moodys' researchers wrote. "Rents skyrocketed in multiple metros, including those previously seen as relatively affordable."

But as rental demand wanes, Americans may soon encounter a more affordable rental market.