Rent Growth Accelerating at Fastest Pace in 21 Months (February 2018 Market Report)

• Median rent nationwide is accelerating at its fastest annual pace in 21 months, climbing 2.8 percent year-over-year to $1,445 in February.
• Home values rose 7.6 percent year-over-year to a median of $210,200, with the San Jose, Calif., metro posting astonishing annual home value growth of 26.4 percent, reaching a median of $1.25 million.
• Going into home shopping season, buyers will have 10.3 percent fewer homes to choose from than a year ago.

Median rent nationwide is accelerating at its fastest annual pace in 21 months, climbing 2.8 percent year-over-year to $1,445 in February.

Rent appreciation slowed between 2015 and mid-2017 but has once again gained speed, in part because for-sale inventory is so tight that it's becoming harder for renters to find homes they want and can afford to buy. Searching for the 'right' home has become a drawn-out affair, and rising prices require more savings for a down payment. Without substantial new apartment construction over the past half decade, rent appreciation would be even stronger.

For the seventh month in a row, Sacramento led major metro areas in rental growth, gaining 8.2 percent year-over-year to $1,849 a month. The median rent in Riverside, Calif., grew at the second-fastest annual rate, climbing 6.7 percent to $1,872 a month.

San Jose home values up 26.4 percent

Also affected by tight inventory, home values rose 7.6 percent year-over-year to a median of $210,200. They've grown between 7.2 percent and 7.6 percent for the past nine months.

The San Jose, Calif., metro posted astonishing annual home value growth of 26.4 percent, reaching a median of $1.25 million in February. Las Vegas' median home value gained 15.9 percent to $254,500, while Seattle's median climbed 14.2 percent to $481,700.

Another double-digit inventory drop

Going into home shopping season, buyers will have 10.3 percent fewer homes to choose from than a year ago. Inventory has fallen every month beginning in February 2015, with declines accelerating into the double digits in nine of the past 10 months.

The largest year-over-year inventory drops for February were in San Jose (down 26.8 percent), Columbus, Ohio (24.2 percent), and Las Vegas (23.9 percent). Seven major markets posted inventory gains from a year earlier: Washington, D.C. (19 percent), Dallas-Fort Worth (up 15.4 percent), Kansas City, Mo. (5.6 percent), Portland, Ore. (4.1 percent), San Antonio (2.8 percent), Baltimore (2.4 percent) and Charlotte, N.C. (0.4 percent).