The US single-family rental market is still strong, but the pace of rent growth has slowed significantly over the past year. The market is looking more like 2019 compared to the price spikes seen during the pandemic.
US single-family rents rose 3.7% in May, compared with the 14.2% increase seen in the same month in 2022, corelogicSingle Family Rent Index (SFRI). The index, which analyzes single-family rent price changes nationally and in major metropolitan areas, declined on an annualized basis for the 12th consecutive month in April.
For most metro areas, single-family rent growth resulted in single-digit annual increases, with the exception of Las Vegas, which posted a decline of less than 1%.
“Single-family rental growth has slowed for a full year, and overall gains are approaching pre-pandemic rates,” said Molly Boesel, principal economist at CoreLogic. “Prior to 2020, single-family rental gains grew in the 2% to 4% range for nearly a decade. However, even though growth has been slow over the past year, rents have increased by 26% since February 2020.
Boesel also noted that rent growth is “bottoming out,” meaning that single-family rent increases have been more or less permanent over the past three years. At low price levels, this poses a challenge to affordability and causes tenants to devote a large portion of their monthly budget to rent.
CoreLogic examined four tiers of rental prices: low-priced (75% or less of the regional average), low-mid-priced (75% to 100% of the regional average), high-mid-priced (100% to 125% ) regional median) and higher value (125% or more than the regional median), and two property-type levels, attached versus detached. For the low-cost category, the increase was 6%, compared to 4.6%, 4.1% and 2.4% for the three other categories. Standalone rental prices were up 2.6% compared to an attached price gain of 4.6%.
Of the 20 metro areas studied, Charlotte, North Carolina posted the largest year-over-year increase in single-family rents in April 2023 at 6.9%. Boston and Orlando, Florida, recorded the next highest annual gains, at 6.2% and 6%, respectively. Annualized rental prices fell -0.8% in Las Vegas, the worst-performing market. Rents rose only 0.1% annually in April in the Phoenix metro and 0.3% in the Seattle metro.
