Renters clearly have had enough of double-digit annual increases for their monthly payments.
Slower demand and growing supply helped push the median asking rent in the 50 largest metropolitan areas down 1.4% to $1,734 in October from 1,759 in September. Rent has dropped 2.6% from July’s peak of $1,781, according to Realtor.com.
The decline from July annualizes to 8%.
Rent was up 4.7% in October from a year earlier, marking the ninth straight month of slowing rent growth, and the third consecutive month with a single-digit increase. But that’s still almost 1.5 times faster than the growth rate just before the pandemic hit in March 2020.
The cities where rent fell year over year in October are all in the Sun Belt. That includes: Riverside, Cal. (-4.7%), Sacramento (-3.4%), Tampa (-2.5%), Las Vegas (-2.5%), New Orleans (-3.7%), Phoenix (-1.6%), Atlanta (-0.8%), and Memphis (-0.7%).
Home-Buying Market
Meanwhile, soaring mortgage rates and still-elevated home prices continue to put a damper on the home-buying market.
Existing-home sales slumped 5.9% in October from September, the ninth straight monthly decline, and were down a whopping 28.4% from a year earlier, according to the National Association of Realtors (NAR).
"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher” from last year, said NAR Chief Economist Lawrence Yun.
The 30-year fixed-rate mortgage averaged 6.61% in the week ended Nov. 17, up from 3.1% a year ago.
The squeeze-out is especially intense for people who want high-end homes. "The impact is greater in expensive areas of the country and in markets that witnessed significant home price gains in recent years," Yun said.
Falling Prices
Meanwhile, home prices continue to slide, with the median price for existing-home sales totaling $379,100 in October, down 1.5% from $384,800 in September and 8.4% from a record high of $413,800 in June.
Still, the October price was up 6.6% from $355,700 a year earlier. The largest year-over-year price gains came in Milwaukee (34.5%), Miami (25.1%) and Kansas City, Mo. (21.4%).
Phoenix reported the highest increase in the share of homes that saw price reductions compared to last year (35.9 percentage points), followed by Austin (31.2 percentage points) and Las Vegas (24.4 percentage points).
Affordability remains an issue. "The median income needed to buy a typical home has risen to $88,300, almost $40,000 more than it was prior to the start of the pandemic, back in 2019," Yun said.
If you’ve bought a home recently, you know what it’s like to meet your mortgage obligations. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840 in the third quarter, NAR reported.
That represents a trivial rise from $1,837 in the second quarter. But the figure soared 50%, or $614, from $1,223 a year ago.
