Annual rent growth slowed by half a percentage point in April from March, the largest monthly drop in at least five years, according to Zillow Research, as the U.S. coronavirus pandemic and resulting economic slowdown that began in March hit in fuller force.
Rent growth had been chugging along at a remarkably stable pace since 2018, with the growth rate rarely rising or falling much from one month to the next, writes Skylar Olsen, a senior principal economist at Zillow. That changed in April, the first full monthly reading since the coronavirus pandemic struck the United States. Typical U.S. monthly rent was $1,594 in April, according to the newly released Zillow Observed Rent Index (ZORI), up 2.9 percent from a year ago, but still the slowest annual growth pace recorded since December 2017.
Rents were growing 3.4 percent year-over-year in March, and that 50 basis point slowdown is the largest since at least 2014, when the ZORI series began.
Year-over-year rent growth slowed in April from March in 33 of the 35 largest U.S. metros, with Columbus and Cleveland the only exceptions. Among those large markets, annual rent growth in April was slowest in Baltimore (+0.4 percent year-over-year), New York (1.1 percent), Houston (1.3 percent) and San Jose (1.3 percent). Annual rent growth was fastest in April in Phoenix (7 percent), Seattle (4.7 percent) and Cincinnati (4.6 percent).
And even in areas where rent was up compared to April 2019, rent itself was lower than March in 16 of the largest 35 markets, with the biggest monthly dollar declines observed in San Jose (–$18, from $3,097 per month in March to $3,079 in April), Austin (–$18, from $1,585 to $1,567) and Los Angeles (–$13, from $2,516 to $2,503).
Rent growth is seasonal and shifts over the course of a year should be expected as local rental demand waxes and wanes. For example, Boston rent growth is often strongest in the late summer through early fall as students return to the area’s many universities and lease-up more apartments.
This article was excerpted from Zillow Research. Read the complete report at this link: https://bit.ly/3eTz8wr
