{"id":22250,"date":"2025-11-18T11:22:05","date_gmt":"2025-11-18T11:22:05","guid":{"rendered":"https:\/\/budgetadirect.com\/?p=22250"},"modified":"2025-11-18T11:22:12","modified_gmt":"2025-11-18T11:22:12","slug":"rents-are-falling-will-home-prices-follow","status":"publish","type":"post","link":"https:\/\/budgetadirect.com\/?p=22250","title":{"rendered":"Rents Are Falling. Will Home Prices Follow?"},"content":{"rendered":"
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Good news for those looking for more affordable housing: Rents keep falling. In October, rents fell for the 27th straight month year-over-year and the third consecutive month-over-month according to Realtor.com\u2019s October Rental Report. The median asking rent for a 0-2 bedroom property in the 50 largest U.S. metros was $1,969, down $29 from this time last year and $9 from September.<\/p>\n

\u201cI anticipate that we\u2019ll continue to see rents stay stagnant or fall slightly,\u201d says Joel Berner, senior economist for Realtor.com. \u201cWe\u2019re probably expecting about a 1% decrease over the next year or so, which is close to what we\u2019ve been seeing.\u201d\u00a0<\/p>\n

Notably, October\u2019s median rent price was $63 cheaper than when rents peaked in August 2022. However, it\u2019s still $245 higher than it was in 2019, prior to the COVID-19 pandemic.<\/p>\n

\u201cI don\u2019t think we\u2019ll ever fully return to pre-pandemic levels,\u201d says Berner. \u201cWe\u2019re just now getting back to a more natural state after that shock that distorted the market for a couple of years.\u201d<\/p>\n

With rents on a downward trend after those years of record highs, is it fair to expect housing prices to follow? Maybe, but there are some things to consider \u2014 especially if you\u2019re a renter thinking of buying a home.<\/p>\n

How does the downward trend in rental costs impact home prices?<\/h2>\n

Declining rent prices could mean declining home prices, welcome news for renters with dreams of homeownership. However, it\u2019s important to remember that home prices don\u2019t fall easily, says Ken Johnson, Walker Family Chair of Real Estate at the University of Mississippi. In fact, right now renting is more affordable than buying in the nation\u2019s 50 largest metro areas according to Bankrate\u2019s 2025 Rent vs. Buy Affordability Study. A major reason for that is that rents have gradually declined over the past few years, while home prices have continued to grow.<\/p>\n

\u201cRental prices do have an impact on home prices, but the effect is asymmetric,\u201d says Johnson. \u201cWhen rents are rising, the value of homes increases. On the other hand, when rents are falling, home prices tend to be sticky heading downwards, meaning declining home prices don\u2019t always follow declining rents.\u201d<\/p>\n

Berner explains that there is less motivation to purchase when renting is noticeably cheaper than buying. \u201cSo, if rents remain low and people feel comfortable staying renters, demand for homes drops. Over time, that could put downward pressure on home prices.\u201d<\/p>\n

The supply side is where things get iffy. If demand drops, but supply drops further, home prices won\u2019t come down. And there\u2019s a bit of a question mark around supply right now due to the government shutdown, says Berner.<\/p>\n

\u201cBefore the shutdown, it looked like builders were starting to pull back in both multifamily and single-family sectors,\u201d Berner explains. \u201cIf new home construction slows, the progress we\u2019ve made toward closing the housing gap will stall. That means cost barriers to homeownership will remain because supply isn\u2019t keeping up.\u201d<\/p>\n

For now, builders are facing significant headwinds in the form of tariffs and declines in the labor force and demand. Higher interest rates impact them, too, as they increase the cost of borrowing to develop more homes.<\/p>\n

So while the housing market may not deliver immediate price relief, renters can use this moment to get ahead financially.<\/p>\n

What can renters do in the meantime?<\/h2>\n

If you\u2019re renting and hope to eventually buy a home, there are several things you can do to prepare yourself for the purchase:<\/p>\n