Rents Decline Annually for the First Time in Six Years

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.

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Oct 18, 2018, 08:00 ET

SEATTLE, Oct. 18, 2018 /PRNewswire/ -- Rents declined nationwide on an annual basis for the first time in more than six years.

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.

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," said Zillow Senior Economist Aaron Terrazas. "With slowing rents and home value growth, searching for a new home should be somewhat less competitive than it was a year ago, giving renters and buyers a bit of breathing room. 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. 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."

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.

Metropolitan Area	Zillow Home Value Index, September 2018	ZHVI Year- over- Year Change	Zillow Rent Index, September 2018	ZRI Year- over- Year Change	Inventory Year- over-Year Change
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

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great 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. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

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ⁱ The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/research/data.
ⁱⁱ https://www.zillow.com/research/mortgage-payments-21610/
ⁱⁱⁱ Mortgage rates for a 30-year fixed mortgage