US Rental Rates, House Values: 1Q 2019

Rental rates in the US have been rising steadily for more than 10 years. The latest data, released April 30, shows that rents for an average US apartment have risen +1.5% in the past year and more than +4% since 2010. That’s a pretty high rate-of-return, even when compared to recent stock market gains.
Seemingly conflicting data however, out Thursday, says US home values are dropping. Below find analysis of this important US real estate and housing market information:

US Rental Rates: 1Q 2019

The latest Apartment List US national rent index, released April 30, increased by +0.4% March to April, the largest month-over-month increase since June 2017 and following a months-long stretch of relatively flat rent growth. Year-over-year growth now stands at +1.5%, still lagging the rates from the two prior years but by a narrowing gap. The April spike appears to signal the end of the renting off-season, as apartment hunting activity picks back up through the spring and summer.
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Year-over-year growth of rental rates at +1.5% at the US national level, which is just below the +1.6% rate of this time last year but still significantly lagging the +2.5% rate from April 2017. Rent growth is slightly trailing the overall rate of inflation, which stands at +1.9% as of the latest data release. However, rent growth is still well behind growth in average hourly earnings, which have increased by +3.2% over the past twelve months. This moderation in rent growth relative to income growth has provided a welcome bit of relief as millions of our nation’s renters continue to struggle with housing affordability, said Apartment List.

Elsewhere, according to Zumper also April 30, overall, the US national one bedroom rent increased 0.1% to US$1,215, while two bedrooms grew +1.2% to US$1,463. On a year to date basis, one and two bedroom prices are up +2.5% and +2.9%, respectively.

US Home Values: April 2019

Signals in the US housing market have been pointing to a potential drop in home prices for almost a year now, and according to the April Zillow Real Estate Market Report, it’s finally happened. The data, published Thursday for the month of April, show the median US home value has dropped compared to a month ago in each of the 35 biggest markets in the US, except for New York, which didn’t change at all. The April decline comes after 85 straight months of gains that brought home values to record highs.
A typical home in the US is worth US$226,800 – down -0.1% from last month – which is led by the trends observed in the real estate market of the West Coast.
While on an annual basis home values have recorded growth of +6.1%, the pace of year-over-year appreciation has slowed down in each of the past four months, where the annual growth rate stood at +8.1% just five months ago.

This collective dip in markets across the county caused the median home value for the US as a whole to drop by -0.1%, the first time the median home value dropped nationally in seven years.
US home prices have been on the upswing since the housing market bottomed out after the financial crisis of 2008.
Over time, US home prices recovered and eventually surpassed their pre-crisis peaks. Heading into the summer of 2018, the number of homes for sale was so low that one realtor predicted that summer would be “the most competitive housing market in recorded history.”
This data was corroborated by the Case-Shiller US housing index, released April 30:

  • Fast-rising home prices are stabilizing nationwide, according to the Case-Schiller 20-US city index of real estate sales.
  • Home values in the 20 cities tracked rose just +3% year-over-year in February, down from +3.5% annual gain in January, Case-Shiller reported.
  • More realistic home prices and increasing inventory is creating a buyer’s market for many Americans heading into the spring homebuying season.

“Slowdown in U.S. Housing Market Is Helping Landlords Raise Rents — Zillow

Finally, data from Zillow released also Thursday shows that US home-price appreciation continued to slow in April from a year earlier, driven in part by softening West Coast metros like San Jose, CA, and Seattle, WA. The company also reported the first nationwide monthly price dip in more than seven years — albeit just -0.1%. At the same time, rent growth accelerated, climbing by +2.6% on an annual basis, after a lull in 2018, said Zillow.