Seattle rent prices inch upward in August
SEATTLE - According to Zillow's August rental market report, the typical rent in the Seattle metro area experienced a slight uptick of 0.4% from July to August, reaching a monthly average of $2,287. This marks a 0.6% increase compared to the same period last year.
Nationally, rental prices also saw modest growth, with rents increasing by 0.3% from July to August, reaching an average of $2,052. However, this year's 3.3% year-over-year growth rate pales in comparison to the record-high 16% surge observed in February 2022.
Annual rent growth was most pronounced in Northeastern and Midwestern markets, showcasing the regional variation in rental trends across the country.
The Federal Reserve is closely monitoring the pace of rent inflation, as it plays a pivotal role in tracking overall inflation. Federal Reserve Chairman Jerome Powell addressed the issue of rent growth in his prepared remarks on August 25th, highlighting the significance of rental data in assessing housing services inflation.
National Rent Trends
As per the latest edition of the Zillow Observed Rent Index (ZORI), the typical rent in the United States now stands at $2,052, reflecting a 3.3% increase compared to the previous year.
Monthly rent growth has been gradually slowing as the nation transitions into a cooler season. While August's 0.3% increase is slightly lower than July's 0.5% growth, it remains higher than the pre-pandemic August average of 0.2% between 2015 and 2019. This suggests some resilience in rent growth or a shift in seasonal norms due to the pandemic's impact.
The 0.3% monthly increase was observed more significantly in the Northeast and Midwest regions, with Buffalo, Cleveland, Birmingham, Columbus, and Milwaukee experiencing the highest monthly rental growth rates.
In contrast, some markets saw year-over-year rent declines, notably Austin and Las Vegas, with monthly changes of -0.6% and -0.1%, respectively. Portland, Oregon, and San Antonio also experienced minor monthly declines, while San Francisco reported no change.
Annual rent growth was most robust in cities like Hartford (7.3%), Providence (7.2%), Buffalo (6.3%), Chicago (6.0%), and Boston (5.8%). On the other hand, western markets such as Austin (-2.5%), Las Vegas (-2.1%), San Jose (0.1%), Phoenix (0.2%), and Portland, Oregon (0.2%), recorded the weakest year-over-year rent growth. These cities, known for their tech industries and as destinations for remote workers, have faced unique challenges in the rental market.
The most expensive major markets in the United States continue to be New York City ($3,412), San Jose ($3,386), San Diego ($3,207), San Francisco ($3,173), and Boston ($3,000). New York City's metropolitan area has consistently maintained its position as the nation's leader in asking rents, a trend noted since July.
Official rent inflation, as measured by the Rent of Primary Residence component of the Consumer Price Index (CPI), has been decelerating, falling from a peak of 8.81% in March to 8.03% in July. This trend indicates a cooling rental market, further supported by a monthly growth rate of 4.98%, which, if sustained, will lower the observed annual growth rate in the coming months.
Rent inflation holds particular significance as it contrasts with the annual growth rate of other CPI components, which have dropped to approximately 1% this summer from a 10.8% high in June of the previous year.
Federal Reserve Chairman Jerome Powell emphasized the importance of monitoring rent inflation in his August 25th remarks at Jackson Hole, stating, "We will continue to watch the market rent data closely for a signal of the upside and downside risks to housing services inflation." This commitment underscores the central bank's vigilance in assessing the housing market's impact on overall economic conditions.
As the rental market experiences varying trends across regions, observers remain watchful for signals of continued change in the months ahead.