As October comes to a close and we look at the real estate market in Rapid City, the first question that arises is, "Should I extend my rental contract or take this opportunity to look for a home?" To put it simply, this fall, interest rates are dominating the market more than home prices.

First, let me clarify the reference point. I have not been able to confirm the sales statistics for Rapid City for the month of October as of the time of writing this article. Therefore, the sales data is based on the first half of 2026 compiled by Redfin, rental data updated by RentCafe on October 2, and interest rates based on Freddie Mac's announcement on October 22.

Let's start with the sales side. According to a report by Stacker summarizing Redfin data, the average monthly median sale price in the Rapid City metro area from January to June was $362,273. Compared to a year ago, this is an increase of 0.4%, essentially remaining stable.

The number of transactions has actually increased. During the same period, an average of 162 homes sold per month, which is a 9.5% increase from the previous year.

On the other hand, the inventory has remained almost unchanged. Active listings are at 898, which is a decrease of only 0.1% from a year ago.

A noteworthy figure is the selling period. The median days on the market have increased to 82.4 days, which is 5.6 days longer than the previous year.

The percentage of homes sold above the asking price is also down to 16.1%, a decrease of 2.7 percentage points from a year ago.

In summary, while prices are holding steady, there is a slight increase in negotiation room. Buyers have less urgency, and sellers need to set realistic prices from the start in this market.

Now, let's move on to rentals. According to data updated by RentCafe on October 2, the average rent for apartments in Rapid City is $1,343. This is a 2.38% increase from $1,312 a year ago.

By size, studios average $1,019, one-bedroom units are $1,219, two-bedroom units are $1,367, and three-bedroom units are $1,654.

It's also important to note that figures can vary significantly across different sites. Rental sites have different sampling methods and aggregation techniques, so even in the same month, the average for one-bedroom units can differ by hundreds of dollars. I recommend checking multiple listings and comparing them with actual advertisements.

Now, let's discuss interest rates. According to Freddie Mac, as of October 22, the average rate for a 30-year fixed mortgage was 7.32%. This is slightly down from 7.40% the previous week.

However, compared to the same time last year when it was 6.19%, this is over a percentage point higher. On October 1, it recorded 7.28%, marking the highest level since November 2023. The 15-year fixed rate was 6.68% as of October 22.

I calculated what this means for your wallet. If you buy a home priced at $362,273 with a 20% down payment and finance the rest at 7.32% for 30 years, your monthly principal and interest payment would be $1,991. This figure excludes property taxes and insurance.

Since the average rent for a three-bedroom unit is $1,654, the difference is significant. Additionally, considering that you need to tie up over $70,000 for the down payment, when looking solely at monthly expenses, renting appears to be lighter.

That said, this doesn't mean renting is the definitive answer. Rent can increase annually, while a home builds equity as you pay it off. Ultimately, how long you plan to stay in the area is the key factor in your decision.

Here's some advice for tenants. Since the rental increase rate is relatively mild at around 2%, if you receive a significant increase upon renewal, it's worth discussing based on local market rates. Having a few screenshots of similar listings nearby can make the conversation easier.

If you plan to move within the next 2-3 years, it may be more reasonable to maintain your rental while saving for a down payment. Conversely, if you intend to settle down for a long time and find a home you like that hasn't sold for months, the conditions for negotiating the price are better than before.

Now, let's consider the perspective of landlords. The fact that rents have increased by around 2% over the past year signals that the market may not be able to absorb significant increases.

Retaining a good tenant is generally more beneficial than having a vacancy for a month or two.

If you're a landlord contemplating selling, keep in mind the average selling period of 82 days. Transactions often slow down as winter approaches, so consider both price and timing in your decision-making.

If you're looking to purchase investment properties, the calculations become tighter. Securing a loan at a 7% interest rate makes it challenging to achieve positive cash flow at current rental levels. It's safer to look for properties where you can increase your down payment or negotiate a significant price reduction.

There are also points that apply to both tenants and landlords. The clauses regarding rent increases and renewal notice periods vary by contract, so be sure to verify these details in writing before signing.

If you're curious about rental regulations in South Dakota, it's best to consult state statutes or local legal aid organizations for the most accurate information. In complex situations, it's advisable to consult a local real estate attorney or an experienced agent.

Lastly, I'll summarize some numbers to keep an eye on. The Freddie Mac rate announcements that come out every Thursday, as well as the second-half sales data released by Redfin or local real estate associations. Once the October figures are published, you can compare them to see if the trends from the first half continue.

If I were a tenant right now, I would maintain my rental this winter while monitoring interest rate trends. However, if I'm looking for a long-term home and a property I like has been on the market for a while, I see no reason to delay making an offer.

In a market where numbers aren't fluctuating wildly, ultimately, each person's plans dictate the answers.