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Apartment rents across the U.S. continued to edge higher in February as an uptick in some central and southern markets offset ongoing price drops in some of the country’s biggest coastal metros, according to a monthly report from online apartment finder Zumper.
The Zumper National Rent Index nudged 0.4% higher from the month prior to a median price of $1,143 for a one-bedroom unit in February, while the rent for a two-bedroom apartment increased 0.7% to $1,358 during the period. February marks the third-straight month of rent growth for one bedrooms and the second month in a row for two bedroom units.
Rent for a one bedroom in San Francisco fell 1.2% to $3,310 in February, while rents for a one bedroom in New York fell 2.3% to $2,910. Meanwhile, Baltimore recorded one of the biggest rises, with a 4.8% jump to $1,090 for a one bedroom.
Dive Insight:
The uptick in rents nationally is not slowing despite signs of a continued decline in higher-cost markets like San Francisco and New York as more units in those cities come online, softening price pressure there.
In August, RentCafe reported that apartment construction reached a 10-year high in 2015 with 320,000 units expected to hit the market in 2016. Cities adding the most units, however, were expected to see rental rates slow to 4.4% by the close of 2016 compared to 5.6% in 2015 and 6.3% in 2014.
A significant share of that slowdown is occurring in the upper tiers of the luxury market. Last month, The Wall Street Journal, citing a MPF Research study, noted that the overall rental market is set to see more than 378,000 new apartments built in 2017, nearly 35% ahead of the 20-year average, but that more supply is being added than ever before. If that pace continues, the slowdown could be felt throughout the category.
Meanwhile, builders like Toll Brothers’ City Living business have shifted their focus to the middle-luxury market in places like New York City, where it has noted growth potential for smaller-scale projects priced around $2,000 per square foot.
Even with the recent upward trend in mortgage rates, rising rents have caused some to consider purchasing a home instead. A report last month from Attom Data Solutions noted that buying a home was more affordable than renting one in two-thirds of U.S. housing markets.
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