Rents declined nationwide on an annual basis for the first time in more than six years according to a new report.
The median U.S. rent is $1,440, according to the September Zillow® Real Estate Market Reporti. That’s down 0.2 percent (which translates to $36 in annual rent) from last September, the first annual nationwide decrease since July 2012. Rent appreciation slowed for seven consecutive months before turning negative in September.
Highlights of the rents report
- Annual rent growth has now slowed for eight consecutive months; rent appreciation peaked at 6.6 percent in July 2015
- The median rent is $1,440, 0.2 percent lower than it was in September 2017.
- The median U.S. home is worth $220,100, up 7.6 percent from a year ago.
- There were 1.9 percent fewer homes for sale than there were last September.
Rents decreased on an annual basis in more than half of the nation’s 35 largest markets. The biggest declines in rent were in Portland, Ore., where rents fell 2.7 percent, and Seattle, where they fell 2.2 percent. However, some markets are still seeing rising rents: Riverside, Calif., rents increased the most, up 3 percent from last September.
Home value appreciation also slowed in September, growing 7.6 percent from the year prior to a median of $220,100. In August, home values rose 7.8 percent annually.
Even as home value growth nationwide is slowing, six of the biggest U.S. housing markets saw double-digit appreciation, led by San Jose, where the median home value increased by 20.9 percent. Even that is slower appreciation than San Jose has seen in recent months – in June, home values there were up 25.4 percent annually. In contrast, Washington, D.C., homes saw the smallest appreciation, gaining 3.7 percent annually.
The slowdown in home value appreciation could benefit home shoppers, but it comes as mortgage rates have seen a sharp increase since the beginning of the year. The higher interest rates have eroded most of the benefits from slower home value growth as mortgage payments for the median-valued U.S. home are growing more than twice as fast as home valuesii.
“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,” Zillow Senior Economist Aaron Terrazas said in a release.
Decline in rents should ease pressure to buy for some
“Rents remain high by historic standards, but September’s modest annual decline in rents should ease some of the pressure pushing higher-income renters to buy,” Terrazas said.
“And though home value appreciation is slowing, homes are more expensive than ever, making it difficult for first-time buyers to save for a down payment to break into the market. Housing plays a central role in most people’s finances, but for people already in their homes with fixed mortgages, there’s minimal spillover.
“For renters, slower rent growth is welcome news and will put more spending money in their already stretched pockets. The slowdown in new construction is more worrisome for the overall economy: Home building has been a net contributor to economic growth and employment, but rising costs mean that it could shift toward a drag in the future,” he said in the release.
The number of homes for sale declined 1.9 percent in September, which was the 44th consecutive month of falling inventory. But it was the smallest annual decrease since early 2015, another sign of the housing market cooling from its recent frenetic pace. About two-thirds of the nation’s largest markets are seeing inventory increase, including some recently hot markets like Portland, Ore., Seattle, and the San Francisco Bay Area.
Mortgage rates on Zillowiii ended the month at 4.5 percent, slightly lower than the high point of 4.56 percent reached a few days prior. At the end of September, mortgage rates were 75 percentage points higher than they were at the beginning of the year. Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site and reflect the most recent changes in the market.
|United States||$ 220,100||7.6%||$ 1,440||-0.2%||-1.9%|
|New York, NY||$ 431,000||5.2%||$ 2,370||-1.9%||5.2%|
|Los Angeles-Long Beach-Anaheim, CA||$ 647,100||5.4%||$ 2,750||0.8%||29.9%|
|Chicago, IL||$ 222,200||5.3%||$ 1,635||-1.9%||2.7%|
|Dallas-Fort Worth, TX||$ 233,200||10.7%||$ 1,594||-0.6%||14.4%|
|Philadelphia, PA||$ 229,300||4.7%||$ 1,566||-1.7%||-8.7%|
|Houston, TX||$ 200,900||6.3%||$ 1,548||0.1%||0.6%|
|Washington, DC||$ 401,000||3.7%||$ 2,133||-0.9%||0.8%|
|Miami-Fort Lauderdale, FL||$ 278,400||8.0%||$ 1,855||0.1%||4.8%|
|Atlanta, GA||$ 209,700||12.3%||$ 1,394||0.7%||-9.4%|
|Boston, MA||$ 458,000||6.2%||$ 2,367||-1.6%||16.7%|
|San Francisco, CA||$ 961,200||9.8%||$ 3,399||-0.6%||40.5%|
|Detroit, MI||$ 157,200||9.2%||$ 1,193||0.3%||6.7%|
|Riverside, CA||$ 362,000||6.4%||$ 1,899||3.0%||21.8%|
|Phoenix, AZ||$ 258,300||7.3%||$ 1,356||0.4%||-6.2%|
|Seattle, WA||$ 486,600||7.4%||$ 2,169||-2.2%||47.3%|
|Minneapolis-St Paul, MN||$ 263,300||6.8%||$ 1,638||0.5%||-1.9%|
|San Diego, CA||$ 589,200||5.9%||$ 2,541||0.0%||47.1%|
|St. Louis, MO||$ 163,100||5.4%||$ 1,139||-1.2%||-4.3%|
|Tampa, FL||$ 208,400||9.9%||$ 1,390||1.4%||3.3%|
|Baltimore, MD||$ 265,600||4.5%||$ 1,740||-0.2%||-0.2%|
|Denver, CO||$ 398,400||6.2%||$ 2,055||0.0%||6.3%|
|Pittsburgh, PA||$ 142,300||7.1%||$ 1,085||-1.0%||-15.4%|
|Portland, OR||$ 391,400||4.9%||$ 1,833||-2.7%||18.0%|
|Charlotte, NC||$ 199,400||10.5%||$ 1,293||0.0%||0.4%|
|Sacramento, CA||$ 400,600||4.8%||$ 1,842||1.8%||17.2%|
|San Antonio, TX||$ 187,800||6.1%||$ 1,330||-1.1%||11.0%|
|Orlando, FL||$ 231,000||9.7%||$ 1,449||1.0%||-2.8%|
|Cincinnati, OH||$ 164,500||7.2%||$ 1,277||-0.4%||-2.3%|
|Cleveland, OH||$ 142,700||6.4%||$ 1,140||-1.0%||-7.0%|
|Kansas City, MO||$ 185,500||9.1%||$ 1,264||-1.4%||0.5%|
|Las Vegas, NV||$ 273,800||15.4%||$ 1,305||1.4%||N/A|
|Columbus, OH||$ 184,200||7.9%||$ 1,336||0.4%||-8.1%|
|Indianapolis, IN||$ 157,200||11.0%||$ 1,195||-1.2%||N/A|
|San Jose, CA||$ 1,288,700||20.9%||$ 3,499||-0.9%||138.1%|
|Austin, TX||$ 300,600||6.6%||$ 1,683||-1.6%||3.2%|
Zillow is a real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.