For more than three years, US home prices and rents moved together, climbing in a heated housing market. That pattern has now broken: median home sale prices fell while rents rose, splitting the choices facing households deciding whether to buy or remain tenants.
The median US home sale price dropped 0.1% year over year in the four weeks ending 25 October, its first fall in more than three years. Median rent nationwide rose 0.1% in October, the first increase in over three years.
The shift has come as mortgage rates sit roughly a full percentage point above their level a year ago. The typical homebuyer’s monthly payment has reached the second-highest level on record.
High borrowing costs and concern about the broader economy have frozen home sales in recent months. Pending home sales in September reached their lowest level in 25 years, while new listings fell to their lowest level since the start of this year.
Fewer buyers have helped bring sale prices down slightly, though the cost of financing a purchase remains high.
Renters face a different market. The national multifamily vacancy rate stood at 7% in October, and vacancies are gradually tightening as the market moves out of the soft conditions of recent years. Chris Salviati, chief economist at Apartment List, described a rental market tightening as vacancies decline and those softer conditions ease.
The San Francisco Bay area led the country’s rent growth, with rents up +13.1% year over year. San Jose, California followed the Bay area in rent growth. Phoenix, Las Vegas and San Antonio continued to record the steepest rent declines, although rents in Austin, Phoenix and Tampa have started to recover.
The result is a housing market moving in two directions at once. Buyers have seen a modest decline in sale prices, while renters are confronting higher costs after years of softer rental conditions.
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