WASHINGTON – The U.S. home rental market cooled in September. The slowdown hit major hubs of the energy industry such as Dallas, Houston and Tulsa, while moderating the boom coming in tech centres such as San Francisco, San Jose and Denver.
Real estate data firm Zillow said Tuesday that median rents rose a seasonally adjusted 3.7 per cent from a year ago, down from the annual pace of 4.1 per cent in August. The slowdown likely reflects the 14.8 per cent surge in apartment construction during the first nine months of 2015, as increasing supplies have tempered price appreciation.
Research by the CoStar Group, a real estate marketer, found that 158,000 apartment units are being built this year, the highest level in more than three decades.
Still, rental prices continue to exceed wage growth.
Average hourly earnings have risen just 2.2 per cent from a year ago, which means that housing is consuming a larger share of renters’ incomes. Meager wage growth, rising rents and climbing home values has led the share of the country renting to climb to 36.6 per cent, the highest level since 1967, according to the Commerce Department.
The median rent nationwide was $1,386 in September, up $50 a month from a year ago. But the data suggest that rental prices are easing somewhat, even in the hottest markets.
Rental price growth has slowed in areas at the epicenter of the oil and natural gas industry. Oil prices have nearly halved in the past year to $44 a barrel. Houston rental costs are up 5.8 per cent over the past 12 months, down from annual growth in excess of 6 per cent. Price appreciation has also slipped in Dallas and Tulsa.
Rental costs remain highest in tech-centric areas such as San Francisco, but appreciation there also began to soften slightly last month. The median rent was $3,348 in San Francisco last month, a yearly increase of 13.3 per cent. But on an annualized basis, the median rent hike has dropped from 14.2 per cent in August.
Of the largest metro areas, only New York reported faster price growth compared to August.
In some parts of the country, prices fell outright on a monthly basis. Tenants found cheaper prices in September compared to August in Cincinnati, Detroit, Philadelphia, Pittsburgh, Rochester, New York and San Diego, among other locales..