Rents, Mortgage Payments Jumped In February

Average monthly asking rent in the U.S. leaped to new heights in February, up 15% year-over-year to a record high of $1,901, though mortgage growth outpaced it yet again, according to Redfin.

Rent growth saw its largest annual increase since Redfin began tracking rental data in February 2019. Mortgage payments rose 31% YOY to $1,716, also the biggest increase recorded by Redfin.

Mortgage payment increases outpaced rent increases in 44 of the 50 largest U.S. metros.

“The cost of housing is going up for homebuyers and renters, but it’s going up more quickly for homebuyers,” said Redfin Chief Economist Daryl Fairweather. 

“That’s because mortgage rates have increased sharply, and will likely continue to do so. When the cost of homeownership increases, many potential homebuyers opt to rent instead, which drives up rental prices. Americans should brace themselves for continued inflation across the board and try to find ways to cut costs.”

Fairweather noted that affordable, walkable cities like Albuquerque and Buffalo are good options for potential homebuyers looking to beat inflation.

Americans are already changing their habits as inflation reached its highest rate in four decades. Advance retail sales grew 0.3% in February, slightly below the 0.4% Dow Jones estimate.

Target Corp.’s Chief Executive Officer, Brian Cornell, predicts that U.S. consumers will drive less and consolidate their shopping into fewer trips as they adjust to pricier gas and food prices. 

 “We’re going to learn a lot about how the consumer reacts in the next 60, 90, 120 days to rising prices,” he told Bloomberg.

Only two metros saw rent decreases in February: Milwaukee (-2.6%) and Kansas City, MO (-1.5%).

The biggest increases were in Austin, TX (40%) and Portland, OR (39%). New York (36%), Newark, NJ, Nassau County, NY, and New Brunswick, NJ all saw rents rise 36%, followed by Fort Lauderdale, FL (30%), West Palm Beach (30%), Miami (30%), and Denver, CO (29%).