Average monthly rents increased by 13% nationwide within the past year, marking the highest growth rate in two years, according to a new Redfin report. However, the national median monthly mortgage payment for homebuyers spiked even more with 17% year-over-year growth since last October.
The 3.2% month-over-month increase in mortgage payments was the largest since last April, and more than double the increase during the same period in 2019. Growth rates for mortgages and rents have been converging, but an uptick in mortgage rates and home prices have caused mortgage payment growth to accelerate from September through October.
The 0.4% month-over-month increase in rents was the smallest in 8 months, signaling a seasonal slowdown or some market relief for renters. Still, rent price increases outpaced mortgage payments for new homebuyers in 29 of the 50 largest metro areas in the United States. The metro areas with the biggest increase in rent prices — over 30% — were in Florida, Washington State, Oregon, Texas, and New York.
“Fast-rising rents could contribute to inflation woes,” said Redfin chief economist Daryl Fairweather. “Employees facing higher rents are likely to demand higher compensation from their employers, which could in turn lead to even more inflation down the line.”
The top 10 areas with the fastest-rising rents are:
- West Palm Beach, FL (36%)
- Fort Lauderdale, FL (36%)
- Miami, FL (36%)
- Seattle, WA (32%)
- Jacksonville, FL (32%)
- Portland, OR (31%)
- Austin, TX (31%)
- Newark, NJ (31%)
- Nassau County, NY (31%)
- New York, NY (31%)
“Skyrocketing rents in some of the most desirable cities suggest that there is an overall shortage of homes, and not just of homes for sale,” Fairweather continued. “The 'Build Back Better' bill that is currently being debated by Congress contains $150 billion in spending earmarked for affordable housing, which could at least begin to address the issue, but the bottom line is that a lot more housing needs to be built in the places that are growing the most.”
St. Louis also was the only metro to see a decrease in rent (-4%) in October compared to a year earlier. Only 15 of the 50 largest U.S. metros saw rents rise more slowly than the 13% national average, including Chicago (+11%), Pittsburgh (+7%) and San Francisco (+7%).
