Coronavirus Causes Biggest Multifamily Rent Growth Slowdown in Years

Apartment rent prices slowed more in April than in several years when the coronavirus pandemic hit, the April Zillow Real Estate Market Report said.

Rent prices grew at a “remarkably stable” pace for the past several years, with the growth rate rarely rising or falling much from one month to the next, Zillow said. That changed in April, the first reading since the coronavirus pandemic struck the U.S.

“The for-sale market continues to improve and seemingly has the bottom in the rearview mirror, but rent growth has slowed significantly,” said Zillow Senior Principal Economist Skylar Olsen. “We’re seeing rents slow now as some people are no doubt pursuing more-affordable options such as moving back in with parents, moving to a less-expensive area or doubling up in instances where it can be done safely.”

The typical apartment in the U.S. now rents for $1,594 per month, up 2.9 percent from a year ago, which is the slowest annual growth pace since December 2017. Rents were growing at a 3.4 percent year-over-year pace in March before the pandemic’s effects hit. “That half a percentage point slowdown is the most dramatic since at least 2014,” Zillow said.

Year-over-year rent price growth slowed from March to April in 33 of the 35 largest U.S. metros, with Columbus and Cleveland the only exceptions, Zillow said.

“The rental market has been hit especially hard because those who are in jobs that faced the most layoffs and furloughs tend to be renters,” the report said. “They also tend to spend more of their monthly income on rent, which means they have less ability to save in case of emergencies.” The for-sale market continues to show momentum. Newly pending sales increased 13 percent week-over-week and nearly 50 percent month-over-month during the seven days ending May 10.

Home values continued their upward trajectory in April, with the typical U.S. home value growing 4.3 percent year over year to $250,492. “The pace of yearly home value growth has now accelerated every month this year after slowing for 20 consecutive months beginning in spring 2018,” Zillow said.