National rent growth is on the rise, according to the October Zillow® Real Estate Market Report.ⁱ The rate of year-over-year appreciation has increased in each of the past four months.

The typical rent in the U.S. is now $1,600, an annual increase of 2.3% in October – just off yearly highs. Looking at month-over-month changes, however, the rate of growth has slowed in each of the past three months. Still, it's likely that yearly growth will continue to accelerate through the end of the year.

Rents grew in most of the country, falling in only two of the 35 largest metros – rents dropped 1.8% annually in Columbus and 0.6% annually in Houston. What's more, the rate of appreciation has increased since a year ago in 26 of those large markets, most significantly in Las Vegas (3.1 percentage-point gain), Kansas City (2.8 percentage-point gain) and New York (2.3 percentage-point gain).

The hottest rental markets were Phoenix (up 6.4% annually), Las Vegas (up 5.2%) and Charlotte (up 4%).

Inventory fell 6.3% annually, the biggest drop in 18 months after a short-lived recovery prior to home shopping season. The inventory decline was sharpest in the bottom-third of the market, which is down 9.4% year-over-year. A lack of available inventory could be keeping more people in the rental market, increasing demand and putting pressure on rents.

"Despite some fearful headlines, the U.S. economy keeps on trucking, and that is reflected in the continued rent growth across the country. The unemployment rate remains near record lows and wage growth keeps adding to renters' pocketbooks," said Zillow Director of Economic Research Skylar Olsen. "The story of today's rent growth is far from just that of a few expensive superstar cities – rather, growing demand for rental housing is bumping up against limited housing supply and low vacancies all across the country."

Annual home value growth in the U.S. slowed for the tenth consecutive month, down to 4.7% year-over-year – the lowest since February 2013. The typical home in the U.S. is now worth $231,700. Quarterly growth was down slightly from the previous month, leveling out after heating up since June. 

Only one market is growing faster than a year ago: home values in Austin are up 7.8% year-over-year, compared to 6.6% growth in October 2018. The Austin market has accelerated especially quickly in the past quarter, up more than three percentage points since July – most in the country among large markets. After Austin, the fastest-growing large markets are Charlotte (up 6.9%), which is also among the hottest rental markets, and Columbus (up 6.6%), the coldest rental market.

Once again, San Jose and San Francisco were the only two large markets that saw home values fall year-over-year. Home values are down 11.1% annually in San Jose and 3% annually in San Francisco. Home values also fell month-over-month in Dallas and Indianapolis, marking the first monthly drops since May in each market.

Mortgage rates listed on Zillow rose slightly in October. Rates reached their monthly low of 3.55% on October 4, then peaked at 3.76% on October 11. Rates ended October at 3.6%, up one basis point from the start of the month. Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site and reflect recent changes in the market.