Asking prices on single-family homes rose in March, while high inventory flattened out rent prices, according to Trulia’s Price and Rent Monitors.
Based on data on for-sale homes and rentals listed on Trulia, the monitors take into account changes in the mix of listed homes and reflect trends in prices and rents for similar homes and similar neighborhoods through the end of March.
With the spring house hunting season upon us, Trulia reported a 7.2 percent year-over-year increase in asking prices on the national level (8.0 percent excluding foreclosures). On a seasonally adjusted basis, prices rose 1.1 percent month-over-month (1.4 percent excluding foreclosures) and 3.5 percent quarter-over-quarter (4.0 percent excluding foreclosures.
Regionally, prices rose annually in 91 out of the 100 largest metros. Once again, the West made the biggest splash in terms of price growth, with Las Vegas, Phoenix, Oakland, Sacramento, and San Jose showing yearly improvements of higher than 20 percent.
On the other hand, rent price growth—for single-family homes, at least—showed signs of stagnancy in March. Nationally, rent for single-family homes increased 0.1 percent year-over-year.
“Why have rents stopped rising on single-family homes? More supply,” explained Jed Kolko, chief economist at Trulia. “Investors have purchased single-family homes—including many foreclosures—and are renting them out. In fact, the number of single-family rentals nationally has increased by almost one third since the housing market last peak: that’s nearly 4 million more single-family homes rented in 2012 than in 2005.”
On the apartment side, rents rose 2.9 percent year-over-year. Taken together, national rents were up 2.4 percent year-over-year in March.
While oversaturation has hindered single-family rent price growth, it may provide a boost in the purchase market very soon.
“Rising prices and flattening rents change the math for investors and renters,” Kolko said. “Some investors will decide to sell the units they’ve been renting out, which would create new desperately needed for-sale inventory. At the same time, some renters watching prices rise will rush to buy before prices rise further, but those who don’t will at least get some relief from stabilizing rents.”