Photo: Robert Clark
In September, after slowing for the previous seven months, national rent fell annually for the time in over six years, according to a new report by the listing site Zillow.
As rents dipped slightly, home prices grew at a slower pace even with less available homes on the market.
“Today’s data are yet another signal that the housing market is easing toward a more normal, sustainable pace after the frenzy of the past three years,” writers Aaron Terrazas, Zillow senior economist, in a statement.
At the national level, the median rent declined 0.2 percent year-over-year to $1,440 in September. That marks the first recorded annual decrease since July 2012.
“Rents remain high by historical standards, but September’s modest annual decline in rents should ease some of the pressure pushing higher-income renters to buy,” writes Terrazas.
At the metro level, rents decreased on an annual basis in over 50 percent of the 35 largest housing markets. Portland, Oregon, and Seattle, Washington recorded the largest declines, at 2.7 percent and 2.2 percent, respectively.
Several other white-hot markets cooled substantially. In New York City and Chicago, Illinois, rents fell by almost 2 percent from last year.
However, some top markets still saw rising rents in September. Rents jumped 3 percent year-over-year in Riverside, California — the largest recorded increase among the largest metros.
“Slowing rent growth is welcome news and will put more spending money in their already stretched pockets,” says Terrazas.
Meanwhile, national home values grew 7.6 percent from last year to a median of $220,100 in September. Home values rose by 7.8 percent annually the previous month.
Yet even as home value growth nationwide slowed, six of the biggest markets recorded double-digit appreciation.
San Jose, California led the growth, with median home values increasing by 20.9 percent from this time last year. And even at over 20 percent annual growth, September’s reading is slower appreciation than San Jose has seen over the last several months. In June, San Jose home values were up over 25 percent annually.
National inventory was down almost 2 percent from last year, which was the 44th consecutive month of falling inventory. But according to Zillow, it was the smallest annual decrease since early 2015 — another sign of “the housing market cooling from its recent frenetic pace.”
Stabilizing home price appreciation may benefit a few homebuyers, but the mild cooling comes just as mortgage rates have seen marked increases since January. Mortgage payments for the typical home are now growing more than twice as fast as home values — eroding whatever monetary benefit slowing price growth may have provided buyers.
“Rising rates do affect housing affordability, particularly in the nation’s priciest markets or for people who are already financially stretched, but overall, mortgage payments are still more affordable than they were historically,” Terrazas tells Livabl.