Single-family for rent is the fastest-growing segment of the U.S. housing market, and has outpaced the growth of both single-family for sale and multifamily housing in recent years.
This week, CoreLogic released its Single-Family Rent Index, which analyzes single-family rent price changes among 20 top metropolitan areas. Nationally, single-family rent prices increased 2.8% year-over-year in January 2018, compared to a 2.6% increase in January of last year.
The report also looked at price by product tier, finding that the growth in single-family rent prices is being fueled by low rental home inventory and high demand. The Rent Index shows that single-family rent prices have climbed between 2010 and 2018; however, year-over-year rent price increases have slowed since February 2016, when they peaked at 4.1%. Single-family housing construction has continued its decline in 2018 according to the U.S. Commerce Department residential construction report, further widening the inventory gap which is one key indicator of the rising rent prices.
Low-end rentals, defined as properties with rent prices less than 75% of the regional median rent, increased 3.8% in January 2018, down from a gain of 4.7% in January 2017. High-end rentals, those with rent prices 125% or more of a region’s median rent, saw less growth with a 2.4% increase in January, though this was up from a 1.5% gain in January of last year.
Of the 20 markets analyzed, Las Vegas had the highest year-over-year increase in single-family rents in January 2018, at 4.8%, followed by Orlando and Phoenix at 4.5% each. Urban Honolulu is the only metro among the 20 analyzed with decreasing rent prices, declining 1.1% year over year in January 2018.
CoreLogic reports that metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. The growth in Orlando and Phoenix was driven by employment growth of 3.6% and 2.7%, respectively, year over year, compared to the national employment growth average of 1.4%, according to data from the United States Bureau of Labor Statistics. Of the 20 metros analyzed, Chicago experienced the lowest employment growth, which could be a factor in its low rent growth of only 0.7%.
Rent prices continue to increase in disaster areas like the Houston metro area, which experienced growth of 2.8% year over year. This is up from a 1.2% increase in October 2017 shortly after Hurricane Harvey, which was the first rent increase for Houston since April 2016.
