Hawaii Claims the Highest Median Rent in the U.S.

from Construction Coverage, Nov 20, 2024

While the rate of inflation in most sectors of the economy has slowed over the last year, the cost of shelter in the U.S. remains high for many consumers. Inflation data released by the Bureau of Labor Statistics in October 2024 revealed that while the Consumer Price Index overall was up 2.4% year-over-year, the index for shelter had risen 4.9% over the same span. Increasing rent prices have been a major reason why.

The dynamics of the rental market in recent years largely reflect simple supply and demand. In the years following the housing crash and Great Recession, the number of new housing construction projects plummeted and were slow to recover over the course of the 2010s. Around the same time, the Millennial generation—America’s largest, with more than 72 million members—began to reach adulthood, introducing greater demand in the market.

Economic conditions during the COVID-19 pandemic exacerbated issues with the rental market. As fast-rising real estate values priced more people out of homebuying, rental markets became more competitive among consumers. On the supply side, inflation in the cost of materials, high interest rates, and tightness in the labor market have all contributed to difficulties in developing new housing stock.

Rental Supply & Prices Over Time

A historically tight rental market drove prices up at the fastest rate since the 1980s

Source: Construction Coverage analysis of U.S. Bureau of Labor Statistics data | Image Credit: Construction Coverage

All of these issues have come to a head over the last couple of years. The combined crunch of limited supply and high demand have driven the national rental vacancy rate—a key metric used to track the availability of rental housing—to its lowest levels since the late 1980s. With fewer units available, prices have risen dramatically. The year-over-year increase in rents jumped from a recent low of 1.8% in Q2 2021 to a peak of 8.7% in Q1 2023. While the pace of rent hikes has since slowed to under 5% annually, providing some relief, renters are still grappling with prices that continue to outpace wage growth and remain at record highs due to years of unusually steep increases.

Residential Rent Prices by Location

Top coastal states are about twice as expensive as the Midwest for renters

Source: Construction Coverage analysis of U.S. Department of Housing and Urban Development data | Image Credit: Construction Coverage

However, the impact of rent increases has not been felt evenly across the U.S., as renters in some locations face much higher costs than in others. Recently released data from the Department of Housing and Urban Development (HUD) shows that 12 states now have median market rents exceeding $2,000 per month, an increase from nine states last year. Hawaii leads the list with a median rent of $2,909, followed by California at $2,803, Massachusetts at $2,461, and New York at $2,335.

Beyond the broader national supply and demand trends, many of these high-cost areas experience even greater pressures due to strong local economies, high levels of tourism, and more severe supply constraints. These constraints stem from a combination of strict regulations, zoning laws, and geographic limitations that make it particularly difficult to increase housing availability in these regions.

Unsurprisingly, the states with the highest rents are also home to some of the nation's priciest metropolitan areas for renters. California dominates the list, claiming 11 of the 12 most expensive metros overall, including all five of the most expensive large metros with populations of one million or more.

This analysis was conducted by researchers at Construction Coverage, a website that provides construction software and insurance reviews, using data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. To determine the locations with the highest rent prices, researchers calculated a median monthly rent estimate across all rental types in each location.

Here is a summary of the data for Hawaii:

Median rent: $2,909
Median studio rent: $1,944
Median 1-br rent: $2,073
Median 2-br rent: $2,710
Median 3-br rent: $3,734
Median 4-br rent: $4,419

For reference, here are the statistics for the entire United States:

Median rent: $1,865
Median studio rent: $1,384
Median 1-br rent: $1,499
Median 2-br rent: $1,798
Median 3-br rent: $2,326
Median 4-br rent: $2,681

For more information, a detailed methodology, and complete results, see U.S. Cities With the Highest Rent Prices on Construction Coverage.