Rent prices saw the largest one-month drop in at least seven years last month, according to the real-estate marketplace Zillow.
Zillow’s Observed Rent Index showed that asking rents dropped by 0.4 percent from October to November, which is the largest drop in the index’s history. The index has previously found November is usually the slowest month for rent increases, but it has not observed a decline of more than 0.1 percent during this time of the year since before the COVID-19 pandemic.
The index showed that rents declined 0.1 percent in October, and the company said in its analysis that the November data “decisively” ends almost two years of monthly rents increasing at above average rates.
The typical asking rent at the national level is $2,008, which is 8.4 percent more than this time last year, per Zillow. The company said rents have been dropping since reaching a 17.1 percent year-over-year increase in February as demand for housing has declined because of high inflation and rental costs.
“More people are doubling up with roommates or family, pushing up the rental vacancy rate and thereby putting some pressure on landlords to keep rent hikes in check,” Zillow’s analysis states.
The index found rents are dropping the fastest in Raleigh, N.C., Austin, Texas, Seattle, Wash., San Jose, Calif., and New York City. All of these cities saw at least a 1 percent drop in rents last month.
Rents still rose in cities like Louisville, Ky., Memphis, Tenn., and Buffalo, N.Y., during the same period.
Zillow’s analysis states that the slower pace of growth will likely appear in the official measures of rent inflation next year.
The price drops come as the Federal Reserve has been taking steps to try to get inflation under control, with a goal to keep the inflation rate at 2 percent. The Fed raised interest rates by 0.5 percentage points to a range of 4.25 to 4.5 percent this week, a smaller hike than its previous repeated increases by 0.75 points.
After a series of four aggressive 0.75-point increases, the Fed appears to be signaling it will slow down the hikes as inflation has begun to show signs of abating.
The inflation rate measured by the consumer price index fell from 7.7 percent in October to 7.1 percent in November, well below its 9.1 percent peak in June but still far short of the 2-percent goal.
Some economists have expressed concerns that the Fed’s moves could cause an economic downturn, but the economy has appeared to show resilience through the months in continuing to add jobs and keep the unemployment rate low.
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