Market update January 2024: Rental market holds steady

As usual this time of year, housing market activity is sluggish, with forecasts indicating a shift towards favoring rentals over homeownership in the coming months.

• According to Realtor.com, the national median list price fell slightly for the sixth month in a row, from $420,000 in November to $410,000 in December.

• The site also reports a 25% decrease in newly listed homes – from 316,990 in November to 235,584 in December. However, this hasn’t alarmed real estate experts, as the holiday season is usually a slow time for house sales. 

• Zumper reports the national median rent for one-bedroom homes is down another 0.2% over last month at $1,496. Notably, this is the first negative year-over-year growth seen since the pandemic. At $1,847, two-bedroom median rent is down 0.5% month over month.

• 55 of Zumper’s top 100 cities saw a drop in rental prices from the previous month, while 17 reported no change.

• “Much of the country is finally moving towards a more balanced relationship between supply and demand,” says Zumper CEO Anthemos Georgiades. “Interest rates will ease and there will be some degree of relief in the home-buying market… but we're not going back to 2.5% mortgages anytime soon.”

• Economists at Goldman Sachs predict the Federal Reserve will make a total of five interest rate cuts in 2024, starting in March. At the current range of 5.25% to 5.5%, five 25 basis point cuts would bring the Fed’s rate down to 4% to 4.25%.

• According to Zumper, 52% percent of renters believe owning a home is no longer part of the American dream.

• Additionally, amidst a construction boom, Zumper’s Georgiades foresees property owners and managers needing to offer increasingly substantial incentives, and ultimately reduce asking rents.

• The National Association of Home Builders credits falling interest rates for the seven-point jump to 44 in builder confidence for newly built single-family homes in January.

• However, single‐family housing starts in December unexpectedly fell 8.6% below the revised November figure of 1,124,000, to 1,027,000.

• Mortgage rates dipped back into the mid-6% range, but not until the last week of December. Had the government collected December construction data then instead of before the decline in mortgage rates, as seems to be the case, the data might have reflected the NAHB’s expression of optimism. Nevertheless, a slump in construction is typical in the cold winter months.

More rental market headlines

LA County offers $68M in rent relief to mom-and-pop landlords – The Real Deal

The threat of a recession and worries over inflation keeping CEOs up at night – REjournals

Meet the world’s first AI-powered HVAC system for multifamily – Multifamily Executive