• For the almost two years leading up to and including May 2016, rents grew faster than incomes, at times more than three times as fast. Then incomes outpaced rents for more than a year. Now rent growth is catching back up.
• Home values gained 6.7 percent year-over-year in November to a median home value of $205,100 – the slowest rate of appreciation since last November.
• Nationally, inventory is down 10.5 percent from a year ago.

The holidays mean it’s bonus time for many workers, and those extra dollars may be especially welcome for renters this season, as the pace of rent growth ticks up again.

Rents remain at historical highs – the typical renter today pays a far greater share of her income on rent than she did historically – and their rate of growth is almost matching income growth for the first time since June 2016.

The Zillow Rent Index – what the typical renter paid, a reflection of typical asking rents – in November was $1,435, up 2.4 percent from a year earlier – which is nearly in line with the 2.5 percent annual growth in incomes during the same month. It’s the second consecutive month during which rents and incomes have grown almost in lock-step: In October, the ZRI climbed 2.2 percent year-over-year, just 10 basis points slower than the 2.3 percent annual income growth, according to the U.S. Bureau of Labor Statistics.

It’s also a turnaround from the previous 14 months, when renters had a reprieve from rapid growth as income growth handily outpaced it at the national level. For almost two years leading up to and including May 2016, rents grew faster than incomes, at times more than three times as fast. Rent growth peaked in July 2015 at annual growth of 6.5 percent.

The fastest rising rents are in Sacramento, Calif., Riverside, Calif., and Seattle – each with annual gains topping 5 percent.

For those who didn’t get bonuses – or big enough bonuses to cover their rents – here’s a calculator that might help during the upcoming annual review season:

Home Values

Home values also continued to rise in November, gaining 6.7 percent year-over-year to a median home value of $205,100 – the slowest rate of appreciation since last November.

San Jose, Calif., led the country in home value growth, at 17.4 percent, surging to a median value of $1,128,300. That gain is due in part to limited inventory: There were almost 55 percent fewer homes for sale in San Jose in November than there had been a year earlier.

Inventory

Nationally, inventory is down 10.5 percent from a year ago. Tight inventory has weighed on existing home sales throughout 2017 and, despite some jumps in late summer and early fall related to market disruptions during and following the hurricanes that hit Texas and the Southeast in August and September, overall home sales have been flat this year. However, expectations around the tax bill may have pushed some home shoppers to pull the trigger on buying earlier than they might have otherwise.

Mortgage Rates

Mortgage rates moved in a very tight range throughout the month of November, reflecting stable financial markets and a predictable monetary policy outlook despite looming leadership changes as the Federal Reserve. Longer-term lending rates have remained low even after the Federal Reserve has hiked short-term interest rates, giving buyers more buying power in a competitive housing market. Mortgages rates[i] on Zillow started and ended the month of November at 3.75 percent, which was also the month high[ii], and hit a low of 3.68 percent in the first week of the month[iii]. Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on Zillow site and reflect the most recent changes in the market.

[i] Mortgage rates for a 30-year fixed mortgage

[ii] Month high occurred on November 1^st and 14^th

[iii] Month low occurred on November 6^th, 7^th, and 8^th