Residential rents in the US have slowed for six months in a row, latest data shows
Rents across the United States remained at the same level in August as they were in the same month in 2017, the first time this has happened since 2012, the latest real estate index shows.
It means that annual rent appreciation has now slowed for six months in a row, taking the median rent on a home to $1,440, according to the figures from real estate firm Zillow.
Rent appreciation has remained below 3% year on year for the past 27 months after growing as fast as 6.6% in July 2015. Median rents are lower than a year ago in 19 of the nation’s largest housing markers.
Rents declined the most in Portland, Oregon, where the $1,834 median is 1.85 lower than in August 2017. The typical rent is growing fastest in Riverside, California, where it rose 3.75 over the past year to $1,899.
The index also shows that home value appreciation is at its slowest pace in two years. Nationally, home values rose 6.55 over the past year to a median value of $216,700, down from a peak post-recession annual appreciation rate of 8.2% in March 2018. In August 2017, home values were increasing 7.4% annually.
San Jose is seeing the fastest home value appreciation, up 22.75 since August 2017. Las Vegas and Atlanta are the only other two large markets where home values grew at a double digit pace, up 125 and 10.4% respectively.
‘Earlier this year, the housing market was a story of diverging paths, with rents steadily cooling and home values picking up speed,’ said Zillow senior economist Aaron Terrazas.
‘Normally rents and home values are tied together, but strong apartment construction and a surge of young homebuyers contributed to this historical anomaly. As summer turns to fall, the more typical pattern is re-emerging, as rents and home values are both slowing in unison,’ he explained.
‘The feverish housing crunch of the past few years seems to be cracking. Slower rent growth means that renters may feel less urgency to buy. While home values continue to grow at double their historic pace, the speed of appreciation is down sharply from its spring highs,’ he added.
The index reveals that in August there were 3.65 fewer homes for sale than the year before. The lack of available homes has been a defining characteristic of the housing market for several years, but this trend is easing, the report points out.
Inventory has fallen on an annual basis for 43 consecutive months, but the speed of its decline has slowed substantially. A year ago, inventory was down 13.15 from the previous year.
Among the largest US housing markets, the biggest inventory declines are in Pittsburgh, Atlanta and Columbus, where inventory is falling at a double digit pace.
The number of available homes on a given day is on the rise in more than half of the nation’s largest markets, but they are returning from very low levels. Inventory is at its lowest point since 2015 in nearly every large market.