Americans paid more to rent homes last month, but broader measures suggest that the surging increases of prior years have moderated in much of the country.
Real estate data firm Zillow said Friday that the median US monthly rent rose a seasonally adjusted 2.6 per cent in March from a year ago, to US$1,389. That was slightly more than the year-over-year increase of 2.5 per cent in February.
US Home Rentals: March 2016
Rental prices ticked up slightly last month in the Los Angeles, Boston, Phoenix and Portland, OR, metro areas. Rents fell in Cleveland, Memphis and Oklahoma City.
After sharp increases in 2014 and much of last year, rents cooled between August and February as stepped-up construction put more apartments on the market. For all of 2015, finished construction of multifamily buildings soared 21 per cent, according to the Commerce Department.
Until recently, rents had been steadily rising at more than double the pace of wages. But rental increases are now almost identical to the 2.3 per cent yearly increase in average hourly earnings tracked by the Labor Department.
But as price growth has slowed, there are signs that builders are pulling back on apartment construction. During the first three months of 2016, permits for new apartment buildings tumbled 5 per cent from the same period a year ago, the Commerce Department said this week.
Demand for rentals may continue to be strong because relatively few millennial renters have enough savings to buy a home, according to a survey released this week by Apartment List, which helps renters search for housing.
Most millennial renters under age 35 say they still expect to buy a home, but 37 per cent of them have saved nothing for a down payment. Of those who have saved, the average down payment on hand was under US$6,00.
US Home Prices, Existing Sales: February, March 2016
US home prices rose 0.4 per cent in February from the prior month, according to the Federal Housing Finance Agency, as job growth fuelled demand for a scant supply of listings.
Meanwhile, existing home sales, as reported by the National Association of Realtors, increased 5.1 per cent in March, rebounding from the 7.1 per cent tumble in February but showing no signs of increased activity among first-time buyers. The first-time buyer share of 30 per cent in March remained unchanged from last month as well as March 2015. Total existing home sales in March increased to a seasonally adjusted rate of 5.33 million units combined for single-family homes, townhomes, condominiums and co-ops, up from a downwardly revised 5.07 million units in February.
March existing sales increased in all four regions, ranging from 11.1 per cent and 9.8 per cent in the North- east and Midwest respectively to 2.7 per cent and 1.8 per cent in the South and West. Year-over-year, the North-east increased 7.7 per cent, the South was up 2.3 per cent and the Midwest remained essentially flat at 0.8 per cent. The West decreased 2.5 per cent from the same period a year ago.
Total housing inventory increased 5.9 per cent in March, but remains 1.5 per cent lower than its level a year ago. At the current sales rate, the March unsold inventory represents a 4.5-month supply, up slightly from February. Some 42 per cent of homes sold in March were on the market for less than a month, the highest since July 2015.