High mortgage rates and economic uncertainty have finally cooled down the property sector, causing the US housing market to experience its first price decline in roughly three years. Meanwhile, as potential homebuyers delay their purchases and remain in the rental market, nationwide rent costs have turned upward for the first time in three years.
According to a recent statistical survey by real estate brokerage Redfin, the median home sales price for the four-week period ending October 25 fell by 0.1% compared to the same period last year. While the drop is relatively small, it marks a significant turning point as the first interruption to three consecutive years of price growth.
Although mortgage rates have eased slightly in recent weeks, they remain about 1 percentage point higher than a year ago. Due to this persistent rate burden, the average monthly mortgage payment for a typical homebuyer has surged to the second-highest level in Redfin’s recorded history.
Market activity has also contracted sharply. Pending home sales, a leading indicator of existing home sales, have continued to decline over the past several weeks. According to the National Association of Realtors (NAR), pending home sales in September dropped to a 25-year low.
Sellers are also pulling back from the market. Redfin reports that new listings have dropped to their lowest level since the beginning of the year. Because housing supply has increased while buyers turn to a wait-and-see approach, it has become difficult for sellers to fetch their desired prices.
Interestingly, the slump in the sales market is producing the opposite effect in the rental sector. According to Apartment List, which tracks rental market statistics, the national median rent in October rose 0.1% year-over-year. Although the increase is minimal, it is the first upward movement observed in over three years, following a prolonged period of downward pressure caused by a supply glut of new apartments.
The national multi-family vacancy rate for October stood at 7%, which remains higher than the long-term average, though it has gradually decreased since peaking earlier this year. Chris Salviati, a senior economist at Apartment List, analyzed that the rental market weakness seen over the past few years is steadily easing.
Changes are particularly visible in Sunbelt regions that previously experienced oversupply due to massive apartment construction. Markets like Austin, Phoenix, and Tampa are showing signs of gradual recovery. However, Phoenix, Las Vegas, and San Antonio still rank among the areas with the steepest rent declines.
Conversely, the San Francisco Bay Area recorded a 13.1% year-over-year rent increase, the highest in the nation, followed closely by San Jose.
Ultimately, high interest rates are eroding purchasing power, creating contrasting trends where selling prices face downward pressure while rental demand remains steady, causing rent costs to rise once again.
