Apartment List released its monthly National Rent Report, showing that the national median rent decreased by 0.7% in October to $1,394 as the rental market entered its slower season. This marks the third consecutive month of declining rents, aligning with recent trends where fall and winter rent dips have been steeper while spring and summer increases have been milder. Year-over-year rent growth stands at -0.7%, with rents averaging slightly lower than last year, though still $200 higher than pre-pandemic levels.
Source: Apartment List (October 2024)
The national vacancy rate rose to 6.8%, the highest since the pandemic’s start, fueled by an influx of new units, including record apartment completions in Q3 2024. Locally, 89 of the 100 largest cities saw rents decline in October. Sun Belt cities with rapid multifamily expansion, like Austin, Raleigh, and Jacksonville, continue to experience the most significant year-over-year drops.
The October 2024 Zumper National Rent Report shows a similar cooling in the rental market, with one-bedroom rents down 0.1% to $1,533 and two-bedrooms down 0.2% to $1,912, marking a shift after five months of increases. This aligns with the Federal Reserve’s recent interest rate cut, its first in four years, suggesting more cuts may follow. New York City’s one-bedroom rent remains at an all-time high of $4,500, while San Francisco’s rents continue to rise. Meanwhile, a top supply leader, Atlanta, sees negative rent growth, and New Haven posts the highest annual growth rate nationally.
Source: Zumper (October 2024)
Zumper CEO Anthemos Georgiades comments:
“September signaled a cooling off in the hot moving season as national one and two-bedroom rents both decreased on a monthly basis—a trend which we have not seen in the last five months…As we transition into fall, this shift in the rental market aligns with the typical seasonal patterns we have finally returned to after the last few years of unconventional fluctuations.”
Finally, CoreLogic released its August Single-Family Rent Index, showing a year-over-year national rent growth of 2.4%, the slowest since last fall, with high-end rents up 2.9% and low-end rents down by 0.2%. Despite a 0.2% monthly decline—a rare drop for August—rent growth since the pandemic remains significant, with coastal metros leading gains. Some Sun Belt cities, including Miami (55%) and Orlando (41%), saw substantial increases over the past four years. Seattle recorded the highest annual increase in August at 5.8%, while Austin experienced a 2.3% decline. The next update is scheduled for November 21, 2024.
Builders
According to Robert Dietz of the National Association of Home Builders (NAHB), builder sentiment rose for the second month in October, climbing to 43, as builders anticipated a moderation in mortgage rates amid easing inflation. Despite challenging affordability, builder optimism for 2025 is increasing, though high prices and tight lending continue to deter many buyers. Price cuts remained steady at 32% of builders, with a 6% average reduction, while sales incentives increased to 62%. All HMI components improved, including sales expectations, which rose to 57.
Source: NAHB (October 2024)
“While housing affordability remains low, builders are feeling more optimistic about 2025 market conditions. A wildcard for the outlook remains the election. The latest HMI survey also revealed that the share of builders cutting prices held steady at 32% in October, the same rate as last month. Meanwhile, the average price reduction returned to the long-term trend of 6% after dropping to 5% in September. The use of sales incentives was 62% in October, slightly up from 61% in September.”
Orphe Divounguy of Zillow reports on building permits and housing starts, noting that September saw a dip in both. Permits were down 2.9% from August and 5.7% year-over-year, while housing starts fell 0.5% month-over-month to 1,354,000 units. However, single-family housing starts rose by 2.7% from August and were 5.5% higher than last year, marking continued growth in this segment. This uptick reflects the influence of slightly lower mortgage rates and improved wage growth, which boosted housing demand and market activity beyond seasonal expectations.
Reuters reports on new single-family home sales, highlighting that it hit a nearly 1.5-year high in September, rising 4.1% to an annual rate of 738,000 units as mortgage rates temporarily dipped. Despite recent interest rate fluctuations, sales grew 6.3% year-over-year, with gains concentrated in the Northeast and South. The median home price held steady at $426,300, while inventory slightly rose to 470,000 units, nearing levels last seen in early 2008.
Joel Berner of Realtor.com comments on this trend: “Buyers have far more options than they did a couple of years ago, when the post-pandemic buying frenzy was at its full height. The stock of homes for sale has finally rebounded to the level of April 2020, but prices have remained sticky and high in recent years. With little relief from the only slightly lower mortgage rates, buyers aren’t seeing as many homes that fall into their budget range as the inventory growth suggests there should be.”
Source: Realtor.com (October 2024)
Reuters also released commentary on homebuilder profits, highlighting that residential builder PulteGroup surpassed profit expectations in Q3 as lower mortgage rates boosted housing demand despite ongoing affordability challenges. With the 30-year fixed mortgage rate down to around 6% by September’s end, buyers returned to the market, benefiting homebuilders amid a persistent housing shortage. Though PulteGroup’s home sales increased 12% from last year, high land and material costs reportedly trimmed margins to 28.8%.
Presidential election
As election day nears, Redfin released a few reports highlighting its impact on housing. First, Mark Worley of Redfin reports that nearly a quarter of potential first-time homebuyers plan to wait until after the election to buy. While 26.1% are waiting to see if Harris’s housing plan is enacted and 15.9% for Trump’s, the main reasons cited include personal finances, ideal timing, and potential policy changes like interest rate cuts. Although mortgage rates have eased, turnover remains low, with just 2.5% of U.S. homes changing hands in 2024’s first eight months.
Source: Redfin (October 2024)
A second Redfin report highlights that almost one in five people (18.7%) have argued with a neighbor over politics, with men (27.1%) and Trump voters (23.1%) more likely to engage in such disputes. Younger generations are also more inclined to discuss politics with neighbors, especially Gen Z (26.4%). Additionally, 11.9% reported disagreements over racial issues, with men (15.3%) and Gen Z (20.1%) again leading in frequency. Reportedly, homeowners (20.5%) are likelier than renters (16.3%) to encounter political tensions with neighbors.
Jiayi Xu and Danielle Hale of Realtor.com analyzed population trends, suggesting population shifts could impact the 2024 election. Nine states are reported to be trending bluer, and 22 states are shifting redder. Blue states like Connecticut and Maine might trend even bluer, while California and Illinois could shift redder. Red states, including Alaska and Ohio, may lean bluer, while Kansas and Texas could become redder. Swing states Wisconsin and Nevada may trend bluer, while Arizona and Georgia lean redder.
Keith Griffith, also of Realtor.com, reports that rising home prices, up 47% over the past four years, have become a key election issue, with Trump and Harris pledging to make housing more affordable. While renters face affordability challenges, many homeowners benefit from increased equity. A recent study indicates that rising home values typically boost support for the incumbent party, even with a new candidate like Harris. Trump’s campaign, however, leverages housing dissatisfaction to critique Democratic policies, aiming to sway voters frustrated with the current housing market.
Indeed, Swapna Venugopal Ramaswamy of USA TODAY reports on housing and the election, highlighting that median home values have surged in key states like Arizona, Georgia, and Pennsylvania, boosting homeowner wealth despite inflation concerns. This aligns with the “homevoter hypothesis,” which suggests that rising housing wealth can sway voters toward the incumbent party, as it provides a sense of financial security. This trend may be pivotal in swing states where voters balance economic concerns with home equity gains.
