Rent prices across the U.S. climbed to record highs in March largely because an increasing number of potential buyers are being pushed out of the market, according to a new report.
The median monthly asking rent increased 17% compared with a year ago, to $1,940, according to real estate brokerage Redfin. This marked the largest annual jump since February 2020, according to Redfin's data.
The price and demand for rentals have surged as "many potential first-time homebuyers are quickly being priced out of the market by record-high home prices and fast-increasing mortgage rates," Redfin chief economist Daryl Fairweather said in a statement.
The national median monthly mortgage payment for homebuyers rose twice as fast in March, up 34% compared with a year ago to $1,910.
The 34% surge in monthly mortgage payments – the biggest increase in Redfin’s records – is "largely because mortgage rates climbed from under 3% to 5% in just the past three months," according to the company.
Fairweather said many buyers are now "faced with two options: rent or move somewhere with a lower cost of living."
Although renting may help buyers save money "in the near term," they will still be faced with "continued rent increases, year after year," he added.
Comparatively, "those who move and buy somewhere more affordable now will be paying considerably more than if they bought last year, but will be able to build equity in the long run and ensure relatively stable monthly housing costs going forward," Fairweather said.
These are the top five metros with the fastest-growing rents on a year-over-year basis, according to Redfin data:
- Portland, Oregon: +40%
- Austin, Texas: +38%
- New York, New York: +35%
- New Brunswick, New Jersey: +35%
- Newark, New Jersey: +35%