U.S. Rents Continue to Rise as For-Sale Inventory Dries Up (October 2019 Market Report)

• Rents grew 2.3% year-over-year in October, driving the median U.S. rent up to $1,600.
• The typical home in the U.S. is worth $231,700, 4.7% higher than a year ago. That's the lowest annual growth since February 2013.
• Inventory fell 6.3% year-over-year, the most in 18 months after a brief period of gains earlier this year. There are 101,724 fewer homes on the market than a year ago.

Annual growth in the U.S. rental market has been very consistent over the past year, never slower than 1.7% nor more than 2.4% — slower than recent annual income growth that has hovered around 3% in recent months and a sustainable pace for renters, especially those trying to save for homeownership.

The median U.S. rent grew 2.3% year-over-year in October and was up 0.2% from September, to $1,600 per month. This growth is well in line with that registered over the past several months, but even so annual growth has crept up in each month since June – from 1.8% to 2.3%. Among the nation's 50 largest markets, annual rent growth was fastest in October in Phoenix (up 6.4% YoY), Las Vegas (+5.2%) and Charlotte (+4.0%).

The nation's four most expensive large rental markets are in California – San Jose ($3,318/month), San Francisco ($3,150), Los Angeles ($2,614) and San Diego ($2,548). Boston rounds out the top five list of most expensive large rental markets ($2,369/month).

The median U.S. home value grew 4.7% year-over-year in October, to $231,700, down from 5.1% annual growth in September and 7.8% year-over-year growth in October 2018. The median U.S. home value was up 0.3% in October from September.

Among the nation's 50 largest markets, annual home value growth in September was fastest in Salt Lake City (+11.5% YoY), Austin (+7.8%) and Birmingham (+7.7%). Growth was negative – home values are currently lower than they were a year ago – in three markets: San Jose (-11.1%), San Francisco (-3%) and New Orleans (-0.1%).

Since hitting a recent high of 8.3% in December, annual growth has been slower than the month prior in every month so far in 2019. But after hitting a low of 0.3% in June, quarterly growth has stabilized around 1% for each of the past three months (1% in August, 1.1% in September, 1.1% in October). Similarly, monthly appreciation has hovered between 0.3% and 0.4% in each of the past four months.

Market conditions over the past several years have been tilted markedly in favor of sellers, who could largely expect to get very close to or even above their asking prices and to receive good offers in a short span of time. Even a small shift in that balance of power in favor of buyers is a good thing for both parties: Smoother market conditions may entice more buyers into the market, people previously wary of the potential for bidding wars and/or tight closing windows. And would-be sellers may be more likely to finally list their homes with less fear of having to turn around and become buyers themselves in a hectic market. The potential for that added inventory from sellers coming off the sidelines will go a long way toward sating pressing demand and alleviating exceptionally tight inventory.

There were 1,514,099 U.S. homes listed for sale in October (seasonally adjusted), down 6.3% from a year ago. Inventory levels have fallen year-over-year in each of the past seven months, although U.S. for-sale inventory was up 0.6% from September.

Inventory was down year-over-year in 39 of the nation's 50 largest metro markets (for which data is available). For-sale inventory fell the most from a year ago in Seattle (-28.4% year-over-year), Sacramento (-20.5%) and Cincinnati (-17.9%). Inventory was up the most from a year ago in Las Vegas (+13.8%), San Antonio (+10.9%) and Detroit (+10.1%).

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