WASHINGTON – Americans paid more to rent homes last month, but broader measures suggest that the surging increases of prior years have moderated in much of the country.
Real estate data firm Zillow said Friday that the median U.S. monthly rent rose a seasonally adjusted 2.6 per cent in March from a year ago to $1,389. That was slightly more than the year-over-year increase of 2.5 per cent in February.
Prices ticked up slightly last month in the Los Angeles, Boston, Phoenix and Portland, Oregon, metro areas. Rents fell in Cleveland, Memphis and Oklahoma City.
After sharp increases in 2014 and much of last year, rents cooled between August and February as stepped-up construction put more apartments on the market. For all of 2015, finished construction of multifamily buildings soared 21 per cent, according to the Commerce Department.
Until recently, rents had been steadily rising at more than double the pace of wages. But rental increases are now almost identical to the 2.3 per cent yearly increase in average hourly earnings tracked by the Labor Department.
But as price growth has slowed, there are signs that builders are pulling back on apartment construction. During the first three months of 2016, permits for new apartment buildings tumbled 5 per cent from the same period a year ago, the Commerce Department said this week.
Demand for rentals may continue to be strong because relatively few millennial renters have enough savings to buy a home, according to a survey released this week by Apartment List, which helps renters search for housing.
Most millennial renters under age 35 say they still expect to buy a home, but 37 per cent of them have saved nothing for a down payment. Of those who have saved, the average down payment on hand was under $6,000
That means they need to delay a purchase, move to another city or take out mortgages with higher debt burdens.