Home prices fall and rents rise, both for the first time in 3 years
High mortgage rates and concern over the broader economy have taken their toll on the housing market, freezing sales for the last few months. Now those issues are having an impact on home prices and rents.
The median U.S. home sale price fell for the first time in more than three years, according to a new report from Redfin, a real estate brokerage. The drop was just 0.1% year over year for the four weeks ending Oct. 25, but it follows three straight years of increases.
While mortgage rates have pulled back some in the last few weeks, they are roughly a full percentage point higher than they were one year ago. Higher rates are putting the typical homebuyer’s monthly payment now at the second-highest on record, according to Redfin.
Pending home sales, which are a measure of signed contracts on existing homes, continued to fall in the past few weeks. A separate report from the National Association of Realtors showed these sales in September hitting the lowest level in 25 years.
New listings are also falling, now at the lowest level since the start of this year, according to Redfin. That is because sellers are losing their advantage as supply rises and buyers back away. They can no longer command the prices they want.
With the for-sale market stalled, more renters are staying put, and that finally has rents rising again. Median rent nationwide rose 0.1% in October, according to Apartment List. That is the first gain in over three years. While it is a tiny move up, it marks a turnaround after an oversupply of new units had rents falling.
“The vacancy rate is also gradually tightening, as the market transitions out of the soft conditions that have prevailed in recent years,” wrote Chris Salviati, chief economist at Apartment List in the report. “Our newest market indicator tracking the concession rate continues to show signs of softness.”
The national multifamily vacancy rate stood at 7% in October, remaining elevated compared to long-term norms, but continuing to decline after peaking earlier this year.
Rents are rising even in the Sun Belt markets, which had seen high vacancies for several years, due to robust construction. Austin, Phoenix and Tampa are finally starting to recover, although Phoenix, along with Las Vegas and San Antonio are still seeing the steepest drops. The San Francisco Bay area led the nation in rent growth, (+13.1% year over year), followed by San Jose, California.
