Single-Family Rents Rise 3 Percent Annually in U.S.
CoreLogic’s newly released Single-Family Rent Index (SRFI) showed a national rent increase of 3 percent in September 2019. The index analyzes single-family rent price changes nationally and among 20 U.S. metropolitan areas. In comparison to September 2018, the index remained flat.
The growth of single-family rent prices is fueled by low rental home inventory. The SFRI shows single-family rent prices have climbed between 2010 and 2019. However, overall year-over-year rent price increases have slowed since 2016 and have stabilized around 3 percent since early 2019. The index peaked at 4 percent around February 2016.
September 2019 marked the 65th consecutive month in which low-end rentals increased national rent growth. Low-end rentals are defined as properties with rent prices less than 75 percent of the regional median. Rent prices among this tier increased 3.8 percent year over year in September 2019, the same as in September 2018.
On the other hand, high-end rentals increased 2.9 percent in September 2019, compared to 2.5 percent in September 2018. High-end rentals are defined as properties with rent prices greater than 125 percent of a region’s median rent.
Among the 20 metropolitan areas analyzed, Phoenix-Mesa-Scottsdale, Arizona had the highest year-over-year increase in single-family rents in September 2019 at 6.7 percent. Las Vegas-Henderson-Paradise, Nevada was at second place at 5.8 percent. Seattle-Bellevue-Everett, Washington ranked as the third-highest metro for rent growth in September with gains of 5.5 percent. Miami-Miami Beach-Kendall, Florida experienced the lowest rent increases of all analyzed metros at 1 percent.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix experienced high year-over-year rent growth in September, which was driven by the annual employment growth of 2.4 percent. Seattle also experienced an elevated annual employment growth of 3.3 percent, which played a role in its above-average rent increase in September. According to data from the United States Bureau of Labor Statistics, national employment growth average was 1.4 percent.