- Home prices finally slipped. The median US home sale price fell 0.1% year over year in the four weeks ending Oct. 25, the first decline in more than three years after three straight years of increases, according to Redfin.
- Affordability is the problem. Mortgage rates are roughly a full percentage point higher than a year ago, putting the typical buyer’s monthly payment at the second-highest on record, and pending home sales in September hit their lowest level in 25 years, according to the National Association of Realtors.
- Rents turned higher. Median US rent rose 0.1% in October, the first gain in over three years, according to Apartment List, as more renters stay put while the for-sale market stalls.
- Vacancies are easing but still high. The national multifamily vacancy rate was 7% in October, elevated versus long-term norms but declining after peaking earlier this year, and the San Francisco Bay Area led rent growth at 13.1% year over year.
What Happened?
Redfin and Apartment List published new data showing both trends reversing at once. New listings are at their lowest level since the start of the year, Redfin said, as sellers lose their advantage with supply rising and buyers backing away. Sun Belt rental markets such as Austin, Phoenix and Tampa are starting to recover after years of heavy construction, though Phoenix, Las Vegas and San Antonio still have the steepest rent declines.
Why It Matters?
High borrowing costs and economic worries have frozen home sales for months, and that is now showing up in prices. A flip from falling to rising rents matters for inflation because housing costs are a major part of price gauges, and the latest PCE data showed housing costs up 0.3% in September. For investors, softer home prices weigh on homebuilders and lenders, while firming rents can support apartment landlords.
What’s Next?
Watch whether price declines deepen as listings and pending sales stay weak, and whether mortgage rates ease after the recent pullback. Apartment List chief economist Chris Salviati said vacancy is gradually tightening, but its concession-rate indicator “continues to show signs of softness,” so the rent recovery may be slow.
