Rent growth slowed across the U.S. again last month as the once red-hot housing market continues to cool.
Nationally, rents increased by 4.7 percent in October, marking the slowest pace of rental growth in 18 months, according to a new report from Realtor.com.
Yet rents are up by 23.5 percent from 2019, and prices in the top 50 U.S. metropolitan regions remain above $1,700 per month.
This has left Americans feeling the sting of inflation as they search for less expensive housing, according to Realtor.com Chief Economist Danielle Hale.
“With soaring inflation and recession fears a huge concern for many consumers, finding affordable housing remains a priority for families. Our data indicates that we are finally starting to see a bit of relief from the double-digit pace of rent growth that we experienced during the height of the pandemic,” Hale said in a media release.
“While it’s still a bit early to say that we’re officially on a downward trajectory for rent prices, the data shows a promising return toward normal seasonal slowdowns and suggests that the astronomical price gains of the past several years may be behind us.”
Yet the report shows that renters are still struggling to pay their housing costs. And landlords, who are also dealing with price hikes, are planning to increase rents in the coming months.
“High inflation and the cost of upkeep and repairs are hitting landlords, who have had to raise rents to cover their higher cost of owning the properties and making it unlikely that they’ll be open to negotiating with new tenants,” Ryan Coon, VP of rentals at Realtor.com, said in the release.
Still, landlords are more likely to negotiate rent costs with those renewing leasing than with new renters. About 22 percent said they would consider negotiating with tenants who are renewing a lease.
Overall, nearly two-thirds of renters who have been in their units for at least 12 months have seen rent increases. This is up from 52.2 percent in July.
The median price hike for those who renewed their leases was $138 per month and $300 for those entering into new lease agreements.
Sky-high costs are also limiting the amount renters can save toward homeownership. The report found that the typical renter can save around $100 each month toward the purchase of a home, leaving just about a third of renters who are looking to buy a home in the next 12 months.
And for those considering a home purchase, current conditions are influencing their plans. About 80 percent of potential buyers said that rising interest rates have impacted their plans.
The Federal Reserve’s series of interest rate hikes to curb inflation have trickled down into the housing market and pushed mortgage rates up substantially from the pandemic housing boom.
Yet data released Thursday shows rates for a 30-year fixed mortgage rate are falling after a report last week showed softer than expected inflation.
The rate for a 30-year fixed mortgage fell to 6.61 percent this week, according to data from Freddie Mac.
But the market could experience further issues in the coming weeks should the U.S. central bank continue to increase interest rates.
“While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market. Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact,” Sam Khater, Freddie Mac’s chief economist, said in a media statement.