A tight housing market pushed room-for-rent costs 23% higher last year

• Roommates.com data shows that the cost of a room for rent increased 23% between January and December 2022.
• The majority of the room-for-rent price increases happened in the first half of 2022.

The cost to rent out a room jumped 23% last year as inflation hit homeowners, according to Roommates.com data.

In January 2022, the average cost of a room for rent in the US was $775. By December 2022, it jumped to $955, and that's climbed another 2.3% in 2023, the report said.

However, the data show that most of the cost increases happened in the first half of last year. The climb leveled off in the second half and was relatively flat in January.

The runup came amid a tight housing market as homeowners grew reluctant to give up low mortgage rates, while prospective buyers balked at the steep surge in rates.

Meanwhile, the overal rental market has cooled off lately. On Monday, the median asking monthly rent in the 50 largest US metro areas dipped 0.5% in May year over year to $1,739 though it was up $3 from the prior month.

Rents are were down $38 from the July 2022 peak but 344 higher than the same time in 2019.

"In May, we saw the first year-over-year decline in rents, a sea-change from the double-digit growth that renters contended with in much of 2021 and 2022. This is yet another sign that rental-driven inflation is likely behind us, even though we may not see this trend in official measures until next year," said Realtor.com Chief Economist Danielle Hale. "Although still modest, a decline in rents combined with cooling inflation and a still-strong job market is definitely welcome news for households."

Realtor.com also reevaluated its previous housing market outlook and now expects average home list prices to dip 0.6% from last year, and rent prices to decline 0.9% this year. Before, the group had forecasted a 6.3% rise in rents.

The revision noted that more apartments are coming to the market, which will ease rental shortages. And with many homeowners unwilling to refinance mortgages they locked in at lower rates before, that could make them more inclined to rent out their properties.