In the wake of the real estate bubble burst, many consumers stayed in the rental market as they waited for their personal financial situation to improve. This resulted in surging rental rates across the country.
However, as conditions improve, a greater number of prospective buyers made the transition to homeownership, which caused the rental market to lose momentum in the third quarter.
During the three-month period, rent across the country increased 0.8 percent from the previous quarter to an average $1,090 per month, according to a report from Reis Inc. While rates still moved in an upward trajectory, this was a notable decline from an increase of 1.1 percent experience in the second quarter.
"Fundamentals still remain relatively robust, particularly given the context of high unemployment and tepid economic growth," the report said.
Meanwhile, property data indicates the vacancy rate edged lower, to 4.6 percent of all rental units, the report said. This was a slight decline from the previous quarter, when the rate was measured at 4.7 percent.
Real estate experts from Reis say these changes could be indicators that the sector is starting to cool, and rental activity may return to pre-recession levels in the near future. This could be especially true, because a greater number of prospective buyers capitalized on fixed mortgage rates hovering near all-time lows in the week ending October 4.
FRMs continue downward trend
During this period, 30-year fixed-rate mortgages averaged 3.36 percent, down from 3.4 percent a week earlier, according to a report from Freddie Mac. Meanwhile, 15-year FRMs were close to 2.69 percent, a slight decline from 2.73 percent.
Additionally, mortgage records show one- and five-year Treasury-indexed hybrid ARMs averaged 2.72 and 2.57 percent, respectively, the report said.
"Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy," said Freddie Mac vice president and chief economist Frank Nothaft.
Gross Domestic Product recently fell to a revised 1.3 percent for the second quarter, Nothaft added. This development, paired with certain housing gains, including a rise in pending home sales, could be an indicator of additional activity in the coming months, which could speed up the housing market recovery.