Rent prices fall for third straight month in November

Yahoo Finance’s Dani Romero joins the Live show to discuss rent prices.

Video transcript

JULIE HYMAN: Average rent prices in the US continued to fall in the month of November, as the housing market enters a cooling off period. Yahoo Finance's Dani Romero is here with the details. I guess it's not true everywhere, but yes, in general, we are seeing those prices come down.

DANI ROMERO: Yes, across the country, yes. Nationally, we have seen rent prices come down consecutive-- for the past three months, consecutively, according to data from Real Page. And this is the largest monthly cut since 2010, setting aside the pandemic-related months. And this dip usually happens during this time of year. However, some housing economists say that this is just not a seasonality type of thing. He said-- the biggest factor weighing on rents right now is the lack of new household formation.

Here's a quote from Jay Parsons that says-- head of economics and industry for Real Page that says inflation and economic uncertainty are having a freezing effect on major housing decisions. When people are uncertain, human nature is to go into that wait and see mode. Net new housing demand is dependent on household formation, which drove the 2021 housing surge, but appears to have frozen earlier this year. So that gives you a really good context of why renters are sitting on the sidelines.

Also, new leasing demand has tumbled in November. And, you know, there's-- a lot of these destination hotspots have also been feeling the pullback from renters as well. It's something that economists say that they haven't seen ever during a period of really solid job gains. And we're on track to end the year in the weakest net apartment demand since 2009.

BRAD SMITH: Wow. So despite the national average falling, New York City average prices, they're still up, what, some 19% here. So where are we really seeing some of that kind of disjointing, especially from last year, and why is that still so elevated?

DANI ROMERO: Well, New York is a totally different ball game. So if we're looking at New York, that's a totally different thing. You know, in New York City, the average monthly payment is around $3,300. That's according to data from StreetEasy. But there's some signs of easing. Some landlords are slashing those leasing prices. Data from StreetEasy shows that 22.3% of New York City rentals on the market had a discount by landlords in November. That's up from 12.5% in last year.

So the reason for these recent discounts is the fact that landlords could be resetting their expectations after really high demand that they saw in the spring and in the summer months. So there could be some silver lining per se here in New York City, but there's a lot more that will really-- to really see that meaningful decline.

JULIE HYMAN: Brad trying to spot his apartment building in that video there.

BRAD SMITH: Actually, one of those was--

BRIAN SOZZI: I saw you on there.

BRAD SMITH: It was a shot of the building across the street from me.

JULIE HYMAN: Oh.

BRIAN SOZZI: Look at you. There we go. Dani Romero, thanks so much.