According to the February Zillow Real Estate Market Report, rent prices grew at their fastest rate in 10 months in February, reaching 2.4 percent year-over-year appreciation. However, while rent price growth increased, national home value appreciation sagged to its lowest level since December 2017.
The report found that the U.S. median monthly rent was $1,472 in February, recording an increase from $1,438 a year earlier. This translates to more than $400 in additional yearly expenses for the typical renter. Zillow noted that rents have steadily recovered since a slowdown in the fall that saw the first annual price decreases in more than six years.
Data on the annual rent growth reflected an acceleration from January rates in most large housing markets, with the biggest jumps coming in Portland—a turnaround after six straight months of annual rent declines from July through December—and Indianapolis.
Orlando and Pittsburgh were the only two large housing markets where rent growth declined. Despite that slowdown, both areas experienced higher-than-average growth, with Orlando rents growing at a faster pace compared to any other large metro area (7.0 percent).
Addressing Amazon’s HQ2 withdrawal from Long Island City, the report indicated that New York renters are yet to feel the effect. New York rent prices along with those in Washington, D.C., and Nashville—two markets where Amazon still intends to build large office spaces—have largely followed national trends since the November announcement, Zillow pointed out.
"The rental market spent part of last year catching its breath after several years of breakneck growth," said Jeff Tucker, Economist at Zillow. "Landlords are now coming to terms with the fact that rent cannot grow faster than income forever, and after that short correction we can expect a much more vanilla, slow-growth market going forward. As we enter the 2020s, the demand for rentals is projected to fall as many millennials move on to homeownership," he added.
The median U.S. home value increased by 7.2 percent increase from a year earlier with a cooldown mostly felt in San Jose, California; and San Francisco. U.S. for-sale home inventory grew 1 percent year-over-year, an increase of 16,137 homes. Inventory picked up the most in San Jose, Seattle, and Los Angeles, further signaling a cooldown from the frenetic pace of the past year in major West Coast markets. Zillow stated that Mortgage rates listed were mostly flat in February. Rates ended February at 4.16 percent, down one basis point from the start of the month.
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