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The median asking rent in the US fell 0.4% to $1,937 in March from a year earlier, the first annual drop since the Covid-19 pandemic struck in March 2020, as the cost of living still high and increased economic uncertainty hampered renting. demandaccording to a recent Redfin (RDFN) report.
“Rents are going down, but it feels more like they’re getting back to normal, which is healthy to a degree,” said Dan Close, a Chicago-based realtor with Redfin. The median requested rent for March in the state was 9.2% below the previous year’s mark.
The overall drop in US rents was largely due to a glut of supply as a result of the home-building boom during the pandemic. And with rental vacancies on the rise, landlords have been lowering rent and offering concessions.
Meanwhile, the median requested rent did not move M/M in March, remaining 19.9% higher than at the start of the pandemic. At the same time, salaries increased at about the same rate.
During the pandemic, some “tried to sell but failed to get a satisfactory offer due to slowing homebuyer demand, Close added.” We now have a lot of rental supply, which is driving prices down because tenants have more options.”
The metro areas that experienced the largest rent drops were Austin, Texas (-11%), Chicago, Illinois (-9.2%), and New Orleans, Louisiana (-3%). By contrast, Raleigh, North Carolina (+16.6%), Cleveland, Ohio (+15.3%), and Charlotte, North Carolina (+13%), were among the metro areas that posted the largest gains for rent.
A big part of the reason consumer price inflation stays stubbornly high is, you guessed it, rent, which typically lags behind home prices. While headline CPI slowed a full percentage point to 5.0% yoy in March, core CPI, which excludes volatile food and energy prices, accelerated to 5.6% from 5.5 % February.
But things look set to pick up on the central front as rent inflation begins to recede. Odeta Kushi, Deputy Chief Economist at First American Family of Companies, took to Twitter saying that “both Owner Equivalent Rent (OER) and Primary Rent (~41% of base CPI), increased 0.5% after bounce between monthly increases of 0.6%-0.8% for about a year.More housing inflation slowdown to come.”
“Slowing haven inflation will drag headline CPI lower in the coming months, demand growth seems to be slowing and so is wage growth,” Kushi added in a follow-up. cheep.
For the week ending April 13, the 30-year fixed-rate mortgage averaged 6.27%, slightly down from 6.28% the week before and up from 5.0% a year ago.