Zillow Group IR Blog

February 2019 Real Estate Market Report

Rent Growth Climbs Again After Short-Lived Correction

For a while last year, it looked like the U.S. rental market might be headed for a serious slowdown. Year-over-year rent growth dipped below 1 percent – and then it stopped growing altogether. In September and October, the U.S. median rent was lower than it had been the previous year – the first time the market had posted annual declines since July 2012.

Now that rent growth has picked up again – to a moderate pace compared to the breakneck growth of earlier years – it appears we’re in for a more vanilla, slow-growth market going forward. During last year’s short-lived correction, landlords began to contend with the fact that rental supply finally started to catch up with demand. As we enter the 2020s, the number of 20-somethings will fall and more millennials will move on to homeownership, which could translate into less demand for rentals.

Nationally, median rent rose 2.4 percent ($34) year-over-year to reach $1,472 a month in February.

Many of the country’s largest metro areas posted modest year-over-year gains of less than 3 percent in both January and February. The fastest gainer in both months was Orlando, Fla., where the median rent rose 7.4 percent year-over-year in January and 7 percent in February. Phoenix was not far behind, climbing 6.2 percent in January and 6.8 percent in February. The third fastest-growing market was Riverside, Calif., climbing 6.1 percent year-over-year in January and 6.2 percent in February.

New York renters have yet to see an effect from Amazon’s decision to not build a new headquarters in Long Island City. Its rent prices, along with those in Washington, D.C., and Nashville – two markets where Amazon still intends to build large office spaces – have largely followed national trends since the November announcement.

The priciest major metro in the country remains San Jose, Calif., at $3,547 in February, up 1.4 percent from a year earlier. It’s followed by San Francisco at $3,448 a month (up 1.6 percent), Los Angeles at $2,835 a month (up 3.5 percent), San Diego at $2,643 a month (up 4.2 percent) and New York at $2,419 (up 1.2 percent).

The lowest rent prices among major metros in February were Pittsburgh at $1,100 a month (up 4.9 percent), St. Louis at $1,155 a month (up 1.6 percent), Cleveland at $1,162 a month (up 1.7 percent), Detroit at $1,225 a month (up 2.3 percent) and Indianapolis at $1,234 a month (up 2.7 percent).

Home values still going strong

Home values nationally continue to soar – up 7.2 percent in February from the prior year. That’s slightly below January’s year-over-year growth rate of 7.8 percent but remains a strong clip, putting the median U.S. home value at $226,300.

Four major metros posted double-digit annual growth in February, led by Indianapolis, which climbed 12.8 percent to $165,600. It was followed by Atlanta, up 11.1 percent year-over-year to $218,600; Las Vegas, up 10.5 percent to $279,600; and Dallas-Fort Worth, up an even 10 percent to $244,400.

The priciest large markets in February featured the usual West Coast lineup – and also happen to be the only major markets without month-over-month appreciation: San Jose at an eye-popping $1.23 million (up 3.3 percent year-over-year), San Francisco at $955,200 (up 3.5 percent), Los Angeles at $652,200 (up 2.5 percent), San Diego at $590,500 (up 2.1 percent) and Seattle at $491,500 (up 3 percent).

The list of least expensive major markets for home values is the same as for rents, but in a different order: Pittsburgh at $144,400 (up 5.2 percent year-over-year), Cleveland at $146,300 (up 6.2 percent), Detroit at $161,300 (up 8.2 percent), Indianapolis at $165,600 (up 12.8 percent) and St. Louis at $167,100 (up 5.4 percent).

Inventory picks up steam

After starting the year on a strong note for buyers, inventory climbed even faster in February – albeit still at a modest 1 percent from a year earlier – an increase of 16,137 homes for a total of 1.6 million listings.

Mortgage rates listed on Zillow were mostly flat in February. Rates ended February at 4.16 percent, down one basis point from the start of the month.

Check out Zillow Research for a closer look at the economy through the lens of the housing market.
January 2019 Real Estate Market Report Zillow Group March 2019 IR Roundup