1. Sinking demand for apartments. Q3 2022 marked the first time in RealPage’s 30 years of tracking U.S. apartments that demand registered negative during a third quarter period. Annual absorption plunged to 77,936 units due to a halt in new household formation. As the economy becomes more uncertain because of inflation and fears of a recession, many would-be renters who are skeptical about their future choose to postpone moving into their own apartments. 
2. Decelerating rent growth. Effective rent increased nearly 13% year-over-year to $1,790. However, looking at a quarter-to-quarter change, rent growth decelerated by 0.7 percentage points during the third quarter. 
3. National rent-to-income ratio fell marginally. In the U.S., renters spent a third of their income toward rent during Q3 2022, declining by -0.2 percentage points since Q3 2021. 
4. Median wage growth exceeded rent growth. The median income of renter applicants increased 11% year-over-year, outpacing median rent growth, which stood at 9.9%.
5. Cleveland had the greatest improvement in apartment affordability. Improved rent-to-income ratios showed up most noticeably among renter applications in Cleveland. This market is home to some of the most prestigious hospitals in the country and has been a hotspot for job growth in health care and pharmaceutical industries over recent years.
6. Apartment affordability became more challenging for renters in Buffalo, N.Y. The rent-to-income ratio for renters in Buffalo has increased by nearly 11 percentage points recently, and it’s likely due to top earners migrating away from the city. The median income of rental applicants was $47,520, as opposed to $55,100 in Q3 2021. 
7. Midland, Texas, ranked as the most affordable market in the U.S. Midland ranked as the most affordable apartment market based on the rent-to-income ratio. According to CoStar Group, effective rent was up by 15.5% year-over-year in Q3. At the same time, the median wages of renter applicants have also improved as employers boosted salaries to attract skilled employees. 
8. Port St. Lucie, Fla., was rated as the least affordable market. The real estate market in Port St. Lucie has been benefiting from pandemic-driven migration trends, with the latest statistics showing that average rents grew at a more moderate pace than recent months but still well above historical norms for this area of Florida during Q3 2019. 
9. Affordability for renters was at highest risk in Athens, Ga. The median rent for apartments in Athens has significantly increased over the past year, while median income levels among those applying for apartments have increased at a much slower pace. Rent growth peaked during Q2 2022, increasing by 9.5% annually but moderated slightly to 8.4% during Q3. 
10. Renters living in Flagstaff, Ariz., had the lowest risk of being rent burdened. Income gains far outpaced rent increases by more than 30 percentage points in Flagstaff, which could reflect an increase in high wage renters applying for apartments. Arizona markets have become a popular destination for renters moving from California looking for a lower cost of living. 

Leah Cuffy is the Senior Research Analyst with NAA.