Rise in Rents Outpacing the Monthly Increase of Buying a Home

First, inflation came for the for-sale housing market, and now it is coming for the rental market.

Those were the sentiments by Redfin chief economist Daryl Fairweather, according to his firm’s new report.

Average monthly rents increased 21% nationwide over the past year and 7% in a single month, according to the brokerage firm’s report. These are the highest annual and monthly growth rates in at least two years—as far back as Redfin’s rental data goes.

The national median monthly mortgage payment for homebuyers climbed at about the same annual rate—20%—but rose just 1% from October. Rapidly increasing housing costs are a big contributor to overall inflation, which hit 6.8% in November, its highest level since 1982.

“Many people have been priced out of the for-sale market and are looking to rent instead, but that demand is pushing up rents,” Fairweather said in prepared remarks.

“Anyone who bought a home before this year can pat themselves on the back because their mortgage payments are fixed, meaning their biggest recurring expense is immune to inflation. If you are looking to buy or rent now, there’s nowhere to hide from inflation when it comes to housing costs. The good news is that the tight labor market means it’s a great time to move somewhere more affordable. Chances are good that no matter where you go, you’ll be able to find a new job relatively quickly.”

Rent-price increases outpaced mortgage payment increases for new homebuyers in 19 of the 50 largest metro areas in the US during November.

The 10 metro areas with the biggest increases in rent prices—up 28% year over year or more—were almost exclusively in Florida and New York. The exception is Austin, where rents were up 30%.

Only Kansas City (-2.3%) and St. Louis (-.3%) saw rents decline year over year