Mortgage Costs Rose Faster Than Rents In August, But Trend Down

The national median for monthly mortgage payments increased faster than rents in 25 out of 50 major U.S. metro areas, but rents are speeding up as mortgage hikes begin to slow, a Redfin report found.

Average monthly rents increased 9% over the past year, reaching $1,836 in August, but median mortgage payments rose 67% faster. August’s numbers represent the seventh month in a row mortgages outpaced rents.

But August also saw a dip in mortgage payment growth, dropping to $1,494, while rents continued to climb.

Rent prices have exploded as would-be homeowners struggled to find affordable houses and battled cash-rich investors in bidding wars.

“Record high home price growth has priced many renters out of buying, leaving many facing higher rents this summer as more households look to move thanks to the rise of remote and flexible work arrangements,” Redfin Lead Economist Taylor Marr said.

“The end of pandemic eviction moratoriums and mortgage forbearance may also cause landlords to raise rents to cover the risk of future tenant protections or make up for lost rental income.”

“Austin has always been a hot real estate market, but the past six months have been wild,” Redfin Austin market manager Jennifer Hoffer added.

“We’ve been working with several landlords who want to sell their properties to cash in on high home prices. But renters right now really don’t want to move, so they’re staying put with long-term leases because they have nowhere to go. I think we will see a spike in rents in the next few months as leases come to an end.”

Redfin used data from more than 20,000 U.S. apartment buildings and compared their rents to home sales data on all forms of residential properties, based on a 5% down payment, median sale prices, and average mortgage interest rates.

Here are some highlights from the report:

Areas with the fastest rising rents:

Tampa, FL: 29.2%

West Palm Beach, FL: 28.9%

Miami, FL: 28.9%

Fort Lauderdale, FL: 28.9%

Jacksonville, FL: 26.8%

Riverside, CA: 23.1%

Phoenix, AZ: 21.9%

Las Vegas, NV: 21.3%

New York, NY: 21.3%

Newark, NJ: 21.3%

Areas where rents decreased:

Pittsburgh, PA: -5%

San Jose, CA: -3%

St. Louis, MO: -0.5%