Vacation Spots See Top Rent Growth

US Single-Family Rents Up 3.1 Percent Year Over Year in August

By Molly Boesel Housing Affordability, Property Rental

  • High-end segment rent growth accelerated and low-end segment decelerated in August 2018 compared with August 2017.
  • Orlando and Las Vegas had the fastest rent growth in August.

Single-family rents in August 2018 increased 3.1 percent year over year, according to the CoreLogic Single-Family Rental Index (SFRI).  The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. Single-family rents climbed steadily between 2010 and 2018. However, year-over-year rent growth has slowed since February 2016, when it peaked at 4.1 percent, and has stabilized over the last year with a monthly average gain of 2.8 percent. 

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 August 2018 was propped up by low-end rentals, defined as properties with rents 75 percent or less of a region’s median rent. Rents on lower-priced rental homes increased 3.9 percent year over year and rents for higher-priced homes, defined as properties with rents more than 125 percent of the regional median rent, increased 2.7 percent year over year. However, rent growth is accelerating for the high end and decelerating for the low end. High-end rent growth was 0.8 percentage points higher and low-end rent growth was 0.4 percentage points lower than in August 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 August 2018. Orlando had the highest year-over-year rent growth in August with an increase of 6.1 percent, followed by Las Vegas (+5.8 percent) and Tucson (+5.3 percent). Orlando and Las Vegas – vacation hot spots – had strong year-over-year employment growth in August, with job gains of 4.1 percent and 3.7 percent, respectively. This is compared with national employment growth of 1.8 percent. Honolulu had the lowest year-over-year rent growth, increasing by 1.2 percent. None of the 20 metro areas had annual rent declines in August 2018. While the growth rate in the national index has stabilized, some metro areas are showing significant acceleration or deceleration compared with a year ago. Houston had the greatest acceleration in rent growth growing 4.6 percentage points faster than in August 2017. Minneapolis rent growth decelerated the most, easing by 2.3 percentage points. 

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

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