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Rent nationwide grew by 0.5 percent between June and July, or about $10 a month, according to Zillow’s latest monthly rent update.
That’s slightly higher than the five-year pre-pandemic July average of 0.4 percent rent growth for the month, as the cost of renting homes and apartments ticked up to $2,062 per month, 3.6 percent more than a year ago.
While that’s a much slower rate of growth from the 16.2 percent spike seen when rent growth reached record heights in February 2022, economists are unsure what might happen next.
“Whether this is just a bump in the road for a market re-calibrating back to normal seasonal appreciation, or an early sign of nascent re-heating, won’t be clear until we see more data in the months to come,” Zillow said in its report. “Nonetheless, rents are growing at a substantially slower pace than last July (1.0%), or in July of 2021 (2.0%, a record high in data back to 2015).”
Zillow provides one of the private indices that is known to lead the federal government’s inflation index by about a year. While the official inflation reports showed housing costs — which represent about a third of total inflation — still rising while Zillow and other indices showed it falling.
The real estate portal giant found that New York City topped San Jose as the most expensive rental market in the country, the first time the Big Apple topped the list since Zillow began tracking in 2015.
Rent is much higher within the city’s five boroughs, reaching $3,799 in July, according to data from Zillow’s New York-based StreetEasy brand.
Rent’s impact on inflation is expected to fall out of federal data in the coming months, helping to relieve pressure the Federal Reserve had faced to raise interest rates.
Rent growth through July is now 2.9 percent. That’s down from the typical 3.9 percent growth seen through July, Zillow said. And there may be reason to expect rent growth to slow down.
Nearly 1 million new rental units are under construction, and the completed projects are expected to continue pushing up the vacancy rate, driving down prices.
Fastest annual rent growth
- Hartford (7 percent)
- Providence (6.5 percent)
- Boston (6.5 percent)
- Chicago (6 percent)
- St. Louis (5.7 percent)
Most expensive markets
- New York City ($3,445)
- San Jose ($3,425)
- San Diego ($3,205)
- San Francisco ($3,188)
- Boston ($3,024)
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