US Single-Family Rents Up 2.7 Percent Year Over Year in March

Southern Metros Had the Highest Rent Growth in March 2018

By Molly Boesel Housing Affordability, Property Rental

  • While low-end rents are still increasing faster than high-end rents, high-end segment rent growth accelerated and low-end segment decelerated in March 2018 compared with March 2017
  • Of 20 metros analyzed, only Honolulu experienced a year-over-year decrease in single-family rents in March

Single-family rents climbed steadily between 2010 and 2018, as measured by the CoreLogic Single-Family Rental Index (SFRI). However, the index shows year-over-year rent growth has decelerated slowly (Figure 1) since it peaked early last year. In March 2018, single-family rents increased 2.7 percent year over year, a 1.5-percentage-point decline in the growth rate since it hit a high of 4.2 percent in February 2016. The SFRI index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.

National Single Family Rent Index

Using the index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in March 2018 was pulled down by the high-end rental market, defined as properties with rents 125 percent or more of a region’s median rent. Rents on higher-priced rental homes increased 2.4 percent year over year and rents in the lower-priced homes, defined as properties with rents less than 75 percent of the regional median rent, increased 3.9 percent year over year. However, rent growth is accelerating for the high end and decelerating for the low end. High-end rent growth was 0.5 percentage points higher than in March 2017, and low-end rent growth was 0.5 percentage points lower than March 2017.

Single Family Rent Index Year Over Year

Rent growth varies significantly across metro areas[1]. Figure 2 shows the year-over-year change in the rental index for 20 large metro areas in March 2018. Las Vegas had the highest year-over-year rent growth in March with an increase of 5.5 percent, followed by Phoenix (+5.4 percent) and Orlando (+5.2 percent). Both Phoenix and Orlando had strong year-over-year job growth in March, with job gains of 3.2 percent and 3.5 percent respectively. This is compared with national employment growth of 1.6 percent. Honolulu was the only metro among the 20 analyzed to show a decrease in the rent index, declining 0.4 percent year over year in March. Rents continue to increase in metro areas such as  Houston and Miami that were hit by hurricanes last year. Houston rents were up 3.4 percent year over year and Miami was up 2 percent year over year. Prior to the 2017 late-summer hurricanes, rents had been decreasing in those two metro areas.

[1] Metro areas used in this report are Core Based Statistical Areas. The SFRI is computed for 75 CBSAs.

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