The pace of year-over-year growth saw the biggest one-month rent-growth slowdown since at least 2014, up just 2.9 percent in April after 3.4 percent growth in March. Rents fell in 16 major markets, according to a release from Zillow.
Rent prices had been chugging along at a remarkably stable pace since 2018, with the growth rate rarely rising or falling much from one month to the next. That changed in April, the first reading since the coronavirus pandemic struck the United States.
The rental market has been hit especially hard because people who are in jobs that faced the most layoffs and furloughs tend to be renters, Zillow said in the release. They also tend to spend more of their monthly income on rent, which means they have less ability to save in case of emergencies.
Skylar Olsen, senior principal economist at Zillow, said in the release that, “Housing was in a generally strong position before the pandemic, with low inventory and high prices shutting many would-be buyers out and creating unusually high demand for rentals.
“Rents soared, making it difficult for many to build emergency savings to tap into at a time like now,” he said.
“We’re seeing rents slow now as some people are no doubt pursuing more-affordable options, such as moving back in with parents, moving to a less-expensive area, or doubling up in instances where it can be done safely,” Olsen said.
The for sale market continues upward
The for-sale market continues to show momentum, though. Newly pending sales are up 13 percent week over week and nearly 50 percent month over month as of the seven days ending May 10. And they are higher than last year in four large metros — Cleveland (up 10 percent year over year), Cincinnati (up 3.8 percent), Houston (up 2 percent), and Dallas-Fort Worth (up 0.9 percent).
Home values continued their upward trajectory in April, with the typical U.S. home value growing 4.3 percent year over year to $250,492. The pace of yearly home value growth has now accelerated every month this year after slowing for 20 consecutive months beginning in spring 2018.