Rental prices are seeing relief as growth slows down from 2020 across the country
Corcoran Group broker Noble Black joins Varney & Co. to discuss homebuilder confidence, mortgage rates and Congressional actions to address the housing crisis.
Employers are expected to see relief from rate hikes this year, at a faster pace rent growth which is expected to slow as the market stabilizes and the affordability ratio reaches a four-year high.
Zillow’s analysis projects that multifamily rental prices are expected to remain relatively low through the end of 2026, falling slightly by 0.2%.
Single family rental expected to increase at an annual rate of 1.1% by December 2026, the report says will represent “a sharp slowdown from the rapid increases of recent years” as vacancy rates and more new construction help keep rent growth subdued as tenants’ bargaining positions improve. Single-family home rentals increased 2.7% last month from a year ago.
Zillow found that the average asking rent in January was $1,895, up just 0.1% from December and 2% year over year. That represents the slowest annual rent growth since December 2020, as the market tightens after prices rose rapidly during the crisis.
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Rent growth slowed last year and this trend is expected to continue through 2026, according to Zillow analysis. (Michael Nagle/Bloomberg via Getty Images)
Multifamily housing rentals grew at a much slower pace, up just 1.4% from a year ago. Zillow’s projection that multifamily rents will slow and remain low this year, indicates that further relief may be on the way.
Slower rent growth has increased the perceived affordability ratio income levels of employers. A middle-income household will now spend 24.3% of its income on typical apartment rent, down slightly from 25% in February 2020.
By one estimate, the average household spends 26.4% of its income on rent, the lowest share since August 2021.
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Austin, Texas, was one of the most affordable metro areas for renters in Zillow’s analysis. (Stock)
Metro areas where that number is significantly higher than the national average include Miami (37.2%), New York City (36.9%) and Los Angeles (34%).
Notable municipalities with better affordability include St. Louis (19.7%), Minneapolis (19.4%), Denver (19.4%), Austin (17.9%) and Salt Lake City (17.9%).
“Renters are operating in a very different environment than they were a few years ago,” said Orphe Dviunguy, chief economist at Zillow. “As supply increases and vacancies rise, property managers must adjust to both rates and terms. Contracts are near record highs, keeping rent growth at a reasonable level and creating meaningful opportunities for tenants.”
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Los Angeles is among the metro areas facing renter affordability challenges. (Patrick T. Fallon/AFP via Getty Images)
Zillow also notes that tenants get more deals on lease terms as they use their negotiating power. renewal and new lease.
It found that nearly 40% of rental listings on the Zillow platform in January had at least one perk, such as a free month of rent or a reduced deposit.
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That’s slightly below the record high set last January, when 41.1% of listings were approved, and the number remains high compared to historical norms.
