Welcome back to The Week in Review.

I hope you had a good one. It’s been an insane week at Casa Sunderji. We are selling our apartment in Park Slope, Brooklyn to move to a rental on the Upper West Side of Manhattan. There are a million things to do, from getting people in to paint, to cleaning the windows, to taking photos—all before we can list. Being part of this process, for the first time as a housing analyst, is interesting.

I’ll likely have many things to say about this along the way, but for now, one observation: being in the hands of a good brokerage team has made everything as stress-free as it possibly could be.

Turning away from my personal housing situation to the wider economy and upcoming data—the Bureau of Labor Statistics releases its measures for the “employment situation,” including the closely watched nonfarm payrolls, on Friday. Last month the report was very weak, showing a sharp slowdown in hiring, wages, and a rise in unemployment.

Barclays expects a reversion to firmer footing, though the read-through for mortgage rates is less clear: Goldman argues “any signs of growth or labor market weakness presents asymmetric risks for yields to move lower.” After mortgage rates rose to over 7% again this week, a weak payroll report is the kind of bad news that could be good news—at least for home buyers.

Here’s what the rest of next week’s data calendar looks like: Realtor.com releases its monthly metrics on Thursday, and in addition to payrolls, we get the Fannie Mae Home Purchase Sentiment Index (HPSI) on Friday:

Subscribers can download the housing economic data calendar here ◉. Schedule a call with me here ◉ if you need help installing it. Onto The Week in Review…

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News: Rents moving sideways, bucking seasonal trends
Views: Surging multifamily supply suggests this softness should continue

ApartmentList released it’s monthly rental data and analysis for May this week. Rents are rising in the Midwest and Northeast, and falling in the South. Here is my map showing year-over-year changes in rents for all metro areas. Yellow means rents up, blue means rents down. The size of each bubble is proportional to each metro’s population.

The ApartmentList report speaks to a sluggish rental market, with modest growth and year-over-year declines, despite being the busy season. They attribute the cooldown to a robust supply of new apartments hitting the market, particularly in Sun Belt cities:

• The national median rent increased by 0.5% in May 2024, reaching $1,404, but the pace of growth slowed compared to previous months.

• Year-over-year rent growth stands at -0.8%, although still over $200 more per month than a few years ago.

• The national vacancy index continues to trend up, reaching 6.7%.

• 80 out of the 100 largest cities saw rent increases in May, but only 43 cities have positive year-over-year rent growth.

• The steepest year-over-year rent declines are concentrated in Sun Belt cities such as Austin (-7.4%), Raleigh (-4.4%), and Orlando (-3.9%).

• Metros in the Midwest and Northeast, such as Milwaukee, Cleveland, Hartford, and Washington DC, are maintaining positive rent growth. Despite losing population, New York City rents are on the upper end of the spectrum.

Consistent with softer rents, vacancies are also rising in the rental market. This contrasts with the less-heavily supplied owner market, where vacancies are close to all-time lows.

The surge of multifamily units coming out of the construction pipeline and into the market remains enormous. This should continue to dampen rent growth, and push up renter vacancy.

Rental trends are somewhat puzzling considering migration patterns, here ◉

News: Case-Shiller home prices rose
Views: The annual rate of gains won’t last

Home prices as measured by the Case-Shiller index rose 6.5% year-over-year in “March” (the average of January, February and March closing prices). The monthly rise was 0.3%. Regular readers know that Zillow provided this data weeks ago, but for what it’s worth, this measure confirmed that home prices continue to rise healthily.

Per S&P CoreLogic:

“San Diego continued to report the highest year-over-year gain among the 20 cities this month with an 11.1% increase in March, followed by New York and Cleveland, with increases of 9.2% and 8.8%, respectively. Portland, which still holds the lowest rank after reporting three consecutive months of the smallest year-over-year growth, posted the same 2.2% annual increase in March as the previous month.”

That said, the annual pace of appreciation is likely to slow, for three reasons.

First: “base effects”— the price gain in spring/summer last year, when inventory was even tighter than it is today, was unusually strong at 0.7% m/m. Against this backdrop, the hurdle for positive yearly changes will be higher over the coming months.

Second: rising mortgage rates. During the survey period—Jan to March, inclusive—mortgage rates were lower than they are today. As recent months, with higher rates, are incorporated into Case-Shiller’s highly lagged measure of home prices, price increases should moderate.

Third: inventory is growing. I pointed out the swell of new single family home units available for sale last week, but the inventory of existing single family housing is also growing.

I don’t think it’s unreasonable to imagine the softness in rental markets I described above filtering into ownership markets over the coming months.

My work showing that Zillow leads Case-Shiller by 6 weeks, here ◉
I wrote about surging new home sale inventory last week, here ◎

Express VPN. Last week I talked about how hard it is being a tennis player in New York City. It’s also not easy being a fan! The French Open is on these days but good luck watching it without paying through your nose for Sling, or another streaming TV package. That’s where VPNs come in: they allow you to fool the internet into thinking you’re somewhere else. These days I’m using ExpressVPN (one of many VPN tools, but maybe the best) to pretend I live in Paris, which means I can connect to TV France, and stream every match for free. Of course, this would also be useful if you’re a fan of British TV (pretend you’re in London to watch the BBC), or Canadian TV (pretend you’re in Toronto to watch reruns of Degrassi Junior High or Hockey Night in Canada), or just about anything airing anywhere else in the world. ExpressVPN, here ◉.

Bottoms. I gave my wife the biggest eye roll when she suggested we watch this movie, which is essentially fight club but for high school girls. “My best friend loved it”, she said. Well, then. But this is another great, tongue in cheek, self-aware GenZ movie, along the lines of Challengers and Saltburn, both of which I’ve recommended here before. Best friend 1, Aziz 0. Bottoms, on AmazonPrime and others, here ◉