Economic Report: Rental price growth is the slowest in nearly four years

Rental costs increased at the slowest pace in three and a half years in December, a small bit of happy news for consumers in a housing market that’s seemed relentlessly strained for some time.

Nationwide annual rent was up 3.5% compared to a year ago, the Labor Department said Friday. While that’s down only one tick from November, it still counts as the slowest yearly increase since June 2015, and continues a two-year trend of slowing rental price growth.

See also: Consumer inflation falls for first time in 9 months due to lower gas prices

Most real estate observers had expected a deceleration in rental costs, as more newly-constructed apartment buildings opened. But the long-term fundamental need for more rental housing means demand is going to remain strong. In a recent market update, Amherst analysts noted that millennials will continue forming households even as high debt burdens and tight lending practices make it difficult to buy homes.

Millennials are also less likely to get married, and married couples are traditionally more frequently owners than renters. That’s all happening as interest rates are rising and home price gains haven’t let up. And the scars of the financial crisis will continue to haunt Americans, the Amherst group wrote: “The fall in ownership is likely to be somewhat sticky given foreclosure experience and aversion to owning.”

Related: As the housing market stagnates, American homeowners are staying put for the longest stretches ever

One silver lining noted in Amherst’s update was an analysis of a metric called the house price-to-rent ratio. The ratio measures how affordable renting versus buying is in any given housing market. A higher ratio is better for renters, while lower ones signal better conditions for owning.

Since the low point of the recession, Amherst analysts wrote, the price-to-rent ratio in the U.S. has grown only by about 8%, much lower than in many other countries, as the aftermath of the housing crisis – low interest rates, plentiful supply of distressed homes – kept conditions favorable for purchasing. Even now, the ratio is still below its pre-recession high.

Still, while historical averages may be meaningful to Wall Street analysts, what matters more to most Americans is finding an affordable, secure place to call home. Most indications are that that’s going to remain a strain, whether home is rented or owned, for the foreseeable future.

Read: 3 outside-the-box alternatives for home buyers looking to succeed in this tough market

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