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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 88 J O U R N A L September 2023 are anticipated to trend downwards in the coming months. As interest rate hikes slow down and inventory remains elevated, sin- gle-family rentals remain an attractive option for potential home buyers, providing stability to the rental market." Key findings about the rental market for single-family detached listings in Q2 of 2023: » Rent prices remain historically high despite a very slight increase in year- over-year price growth. With about 70% year-over-year increases in the weekly average of listings in the second quarter of 2023, prices of single-family rentals have only seen a slight year-over-year increase of about 0.2%. » Southern states have experienced the most upward growth in the number of listings available for rent in the market. Most notably, MSAs located in Florida, Louisiana, and North Carolina experi- enced the largest growths in inventory year over year and made up 80% of the top 10 MSAs with the largest increases. » Two California MSAs now top the list for the nation's highest median rent prices of Q2 2023. MSAs in California and Florida boasted some of the most expensive sin- gle-family median monthly rental prices. MSAs in these two states comprised 70% of the 10 highest average monthly rents across the country, with Los Angeles-Long Beach-Anaheim, California and San Diego-Carlsbad, California taking the top spots with a median price of $4,984 and $4,862 per month, respectively. » By the end of Q2 2023, rental properties stayed on the market for an average of 25.8 days, roughly a 43.97% increase since the same period in 2022. Most notably, six of the top 10 MSAs showing the largest annual increases in days on market year- over-year are located in the South of the United States. Of which, Raleigh, North Carolina, boasted a 165% increase since Q2 2022 and claimed the top spot on the list. » Rent prices have likely peaked and are expected to remain high as potential home buyers are still hesitant to enter the purchase market. High prices and interest rates have provided somewhat of a floor to any possible large decreases in rental prices in the near future. Among the least expensive median rental prices for Q2 2023, states in the southern U.S. take up nine of the 10 spots on the list, with Cleveland, Ohio, being the only exception, following similar trends observed in Q1. Southeastern states also made up five of the 10 MSAs with the lowest median rental prices. With little room for additional price growth due to elevated inventory and relatively high prices across rental markets, experts predict these areas will likely main- tain low median rental prices. OPTIONS FURTHER CONSTRICT FOR HOMEBUYERS A ccording to Realtor.com's July 2023 Housing Report, the U.S. housing supply grew in July, as active listing growth slowed for the fourth month in a row and fell below year ago levels (-6.4%) for the first time since April 2022. While buyers had fewer for-sale options, with active inventory 49.2% below typical pre-pandemic July levels, the market tipped slightly in their favor as the median list price declined year over year (-0.9% to $440,000) for the second month in a row. "While a second monthly year-over-year decline in list prices bodes well for potential buyers, the ongoing lack of homes available for sale continues to prop up home prices and will keep declines relatively modest for the re- mainder of the year," said Danielle Hale, Chief Economist for Realtor.com. "Interest rate hikes continue to further cut into buyers' purchasing power, although they appear to have adapted to the higher mortgage rate environment faster than sellers, many of whom are still on the sidelines, locked in to lower interest rates and unwilling to cash in their home's equity to purchase another. That's putting a damper on home sales, which will likely post their small- est annual tally this year in over a decade." Growth in the U.S. inventory of active listings slowed for four months in a row, and in July, declined compared to the previous year for the first time since early 2022, thus resulting in today's buyers having significant- ly fewer options to choose compared to just one year ago. Realtor.com reports that on a typical day in July, there were 45,000 fewer homes available to buy. In July, the U.S. inventory of active listings slowed for the fourth month in a row and decreased -6.4% compared to July 2022; the de- cline was the first since April 2022. Inventory is 49.2% below typical July pre-pandemic levels. Both newly listed homes (-20.8%) and pending listings (-12.6%), or homes under contract, declined year-over-year, as Realtor. com reports July's decline in pending listings is smaller than June's -16.7% decline, and much improved from December's peak decline (-36.9% year over year).