Real Estate

An algorithm that’s widely used to price property rentals may be helping to drive up rents in the United States. YieldStar, a price-prediction service offered by Texas-based analytics company RealPage, suggests rental rates that are often higher than the market average.

House sales priced by algorithms account for a small but growing portion of the real estate market. Companies that use algorithmic pricing models to buy and sell houses purchased roughly double the volume of transactions in two years. However, these deals may not benefit typical home buyers.

The real-estate website Zillow bought and sold homes based on prices estimated by an algorithm — until Covid-19 confounded the model’s predictive power. Zillow, whose core business is providing real-estate information for prospective buyers, shut down its house-flipping division after...