Market update February 2024: Rentals come out on top

Despite a gradual balancing out between rental supply and demand, persistent high demand and rental prices continue to boost sector earnings.

From the perspective of Zumper CEO Anthemos Georgiades, “The new math behind the decision to rent or buy has been well documented, but this isn’t a temporary shift that’ll reverse once interest rates come back to earth. Renting a home is now widely considered a viable and appealing option for all types of Americans.”

• According to Realtor.com, the national median list price fell slightly for the seventh month in a row, from $410,000 in December 2023 to $409,500 in January 2024.

• The site also reports a 25% increase in newly listed homes – from 235,584 in December to 295,178 in January. While this aligns with typical winter inventory levels, it remains significantly lower than previous years, particularly before mortgage rates reached 5-7% in 2022.

• Most forecasting models predict mortgage rates will remain above 6% in 2024, with potential decreases having to wait until 2025. A fall in rates could encourage more homebuyers but also reduce demand for rental properties.

• Zumper reports the national median rent for both one-bedroom and two-bedroom properties is flat over last month, at $1,496 and $1,847 respectively.

• “Pandemic-fueled migrations have slowed just as new multifamily buildings are coming online in many markets,” explains Georgiades. “And, to top it off: winter is a slow season for moves, driving demand even lower. Renters have more leverage right now than anytime in recent memory.”

• Experts agree the rental market has slowed, but data indicates it hasn’t collapsed – the one-bedroom median rent is still up three-tenths of a percentage point year-over-year. And while 42 of Zumper’s top 100 cities saw a drop in rental prices from the previous month, 46 saw an increase, mostly across the Midwest.

• The National Association of Home Builders reports builder confidence for newly built single-family homes rose four points to 48 in February – the highest level since August 2023.

• “With future expectations of Fed rate cuts in the latter half of 2024, NAHB is forecasting that single-family starts will rise about 5% this year,” said NAHB Chief Economist Robert Dietz.

• Single‐family housing starts in January were at a rate of 1,004,000 – 4.7% below the revised December figure of 1,054,000.

More rental market headlines

Meet Zillow rooms for rent: A Craigslist killer for the millennial and Gen Z set – Fortune

Medicaid enrollment cuts led to more evictions, study finds – Axios

82% of renters want more fee transparency – Multifamily Executive