Dive Brief:
- On a national basis, rental hikes are finally easing, with about one in 10 listings experiencing a rate cut year-over-year, and the national median rent dropping by 2.9%, Trulia reported. Of the 100 largest metro areas, 83 saw a growth in price cuts this year as compared with the previous year.
- Prices of for-sale properties continue to rise, but some sellers are pricing their homes lower, either to sell them more quickly or simply because the rapidly inflating market is making price-setting a challenge. One in 10 for-sale homes nationally saw a price cut, and price cuts grew in 69 of the top U.S. markets this year.
- The Texas cities of Dallas, Austin, Houston and Fort Worth had the highest proportion of increases in rent reductions. When it comes to price reductions of for-sale listings, Dallas and Austin topped the list in year-over-year increases, followed by San Antonio, TX, San Jose, CA, Camden, NJ, and San Francisco.
Dive Insight:
In March, rents increased just 0.7% versus the previous year, the slowest growth rate in five years. The rental cost slowdown is welcome news to both tenants and builders, as several years of rising rates have impeded some potential first-time homebuyers from saving up for a down payment.
A Zillow analysis found that rental prices are increasing faster than incomes — a trend that shows the gap between the cost of owning vs. renting one continues to close, making homeownership a more attractive option.
However, low inventories continue to drive for-sale home prices upward. In February, the S&P CoreLogic Case-Shiller U.S. National Home Price Index rose at an annual rate of 5.8%, the largest increase in two and a half years. During that time, Seattle, Portland, OR, and Dallas saw the biggest year-over-year price increases at 12.2%, 9.7% and 8.8%, respectively.
Median prices for existing single-family homes grew 6.9% year over year in the first quarter of 2017, the third-straight quarterly increase. The new-home sale category is also experiencing significant price increases, with the median sales price of new homes sold in March at $315,100, up from $293,100 in February and $311,400 a year ago.
With demand continuing to pick up amid the spring selling season, builders across the U.S. are working to ramp up production to meet that demand and slow the rapid growth of home prices.
