US home rental cost growth is slowing
WASHINGTON (AP) — U.S. renters saw their monthly leases rise at a significantly slower pace in February, a sign that new construction may be starting to limit housing costs for apartment dwellers.
Real estate data firm Zillow said Thursday that median rent rose a seasonally adjusted 2.6 percent from a year ago. The median rent nationwide was $1,383 a month, having barely budged over the past six months after a period of extended acceleration. Two major forces appear to be dampening price growth: an influx of new apartment construction and renters finding their incomes are too low to afford further price hikes.
For the first two months of 2016, finished construction of multi-family apartment units is running nearly 19 percent above last year’s pace. This would come on top of a 21.4 percent increase in 2015, according to the Commerce Department.
Price growth has slowed in many metro areas where gains are running above the national average: New York, Los Angeles and Houston. Rental costs have slowed in still hot markets such as San Francisco, San Jose and Denver. Prices have fallen outright in Cleveland, Oklahoma City and Memphis, Tennessee.
Not all markets have seen price growth slow — with many markets seeing rental costs rise at a faster clip.
The median rental price in Seattle has climbed 7.22 percent to $1,946 a month, despite a wave of development in that area. Rental costs are also picking up speed in Boston and Portland, Oregon.
Rental prices had until recently been consistently rising at more than double the pace of wages. But February’s slowdown put rents closer to the 2.2 percent increase in average hourly earnings tracked by the Labor Department.