Sep 22, 2022 - Economy

Rents could finally be peaking

Data: Realtor.com; Chart: Axios Visuals
Data: Realtor.com; Chart: Axios Visuals

See how the line in the chart ticks down a little smidge on the right? That's a clue that after more than a year of massive increases, rent growth in the U.S. is moderating.

Why it matters: Housing costs, including skyrocketing rent prices, are a major driver of inflation.

What's happening: The U.S. median rental price fell last month for the first time since November 2021, to $1,771 from $1,781 in July, Realtor.com reported Thursday.

Meanwhile, a couple of other data sets seem to confirm that at least for a month — rent increases weren't so painful:

  • Median rents for single-family homes — which typically command higher prices than apartments — also fell slightly over the past three weeks, according to data from Altos Research.
  • Rent prices in Manhattan, one of the hottest markets in the country, plateaued in August, according to a report also out Thursday from brokerage Douglas Elliman.
  • This was somewhat unexpected given that August typically sees the highest level of activity in the New York market, said Jonathan Miller, the CEO of appraisal firm Miller Samuel, who authored the Elliman report.

Zoom out: Rents are still near record highs, and these movements aren't yet a trend — just a one-month data point.

  • Plus, as rising mortgage rates discourage home-buying it pushes more people into the rental market — driving more inflation. Quite the conundrum.

What we're watching: The rental market may only truly cool off if the economy enters a recession, Miller says.

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