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Renters’ switch to buying takes gas out of rents

The pace of rent increases slowed in January as more people became buyers, according to market reports released Wednesday.

In January, the median monthly rent in Manhattan hit $3,150, up 2.6% from the same time last year, according to a report from Douglas Elliman, continuing a recent trend of relatively modest rises. For the past few months, year-over-year rent increases have been about five percentage points lower than they were for about a year prior, says Jonathan Miller, the CEO of Miller Samuel Inc. who prepares the Elliman reports.

“It’s now the fourth consecutive month with a very modest year-over-year rise in median rent,” Mr. Miller said. “One of the key reasons you’re seeing the pace of rental growth ease is that you’re seeing [low] mortgage rates pulling in buyers.”

Mark Menendez, Douglas Elliman’s director of rentals, reported similar findings.

“The changes [in median rent] are minimal, but we’re seeing renters move into the buyers market a lot more now,” Mr. Menendez said.

Meanwhile, Citi Habitats reported that between December and January, rents actually dropped slightly. The average Manhattan apartment rented for $3,211 in January, a decrease of $23 from the previous month. Year-over-year, however, average rents were up.

“Although prices are down slightly, they’re still at pretty high levels, and they are higher than they were a year ago,” said company President Gary Malin.

Over in Brooklyn, the median rental price fell by 4.2% to $2,527 between December and January, but remained essentially unchanged from the same time a year ago, according to the Elliman data.