Across the U.S., rent growth is picking up its pace following a year of relatively stagnant appreciation, according to the latest quarterly HotPads® Rent Report.
The U.S. median rent is $1,530 per month, up 3.1 percent from a year ago. Rent growth slowed in 2018, but appreciation has been on the rise in recent months. Now, rent growth is at its highest level since August 2017.
Compared to this time last year, rents are rising faster in 36 of the country’s 50 largest metro areas. Austin had the largest increase in rental appreciation, followed by Phoenix and San Jose. The median rent in Austin is $1,760, up 3.2 percent from a year ago – last year at this time, rents in Austin rose 1 percent annually.
While Austin’s rent appreciation had the largest jump, rents in Phoenix are still rising faster than any other market analyzed. The median rent in Phoenix is $1,510 per month, up 6.6 percent over the past year. A year ago, Phoenix rents rose 4.9 percent annually.
While rent prices have been rising for the past six yearsi, the pace of appreciation started to slow in 2016 as the economy recovered and construction halted by the recession came online. With income growth beginning to outpace rent appreciation nationwide, housing affordability is a top concern in many of the nation’s largest markets.
“We have entered a new phase in the housing cycle,” said Joshua Clark, economist at HotPads. “A year ago, the country was experiencing slowing rental markets and tighter for-sale markets. Today, most of the country is experiencing the opposite: The rental market is picking up the pace, while prospective home buyers have been better equipped to get off the sidelines as the housing market cools. This is a welcome shift for renters who have been waiting to buy, but those who continue to rent will face a high-pressure market through the busy summer season.”
While rent growth picked up in most of the nation’s largest metro areas, many historically hot rental markets cooled over the past year. In February 2018, Sacramento and Seattle had the country’s fastest-rising rents. Now, rent growth has declined more in Sacramento and Seattle than in any other metro area analyzed – annual rent appreciation slowed from 7.7 percent to 5.9 percent in Sacramento, and from 5.9 percent to 4.1 percent in Seattle.
HotPads is a Zillow® Group-owned apartment and home search platform for renters in urban areas across the United States. For more information on the U.S. rental market, visit HotPads.com.