Rent Growth Ticks Up

US Single-Family Rents Up 3.2 Percent Year Over Year in September

By Molly Boesel Housing Affordability, Property Rental

  • High-end segment rent growth accelerated and low-end segment decelerated in September 2018 compared with September 2017.
  • Phoenix had the fastest rent growth in September.

Single-family rents increased 3.2 percent year over year in September 2018, up from a 2.7 percent increase in September 2017, 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. The increase in rents has ticked up in recent months, inching above a 3 percent year-over-year increases starting this June.

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 September 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 2.8 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 0.3 percentage points lower than in September 2017.

Single Family Rent Index

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 September 2018. Phoenix had the highest year-over-year rent growth this September with an increase of 6.6 percent, followed by Las Vegas (+6.2 percent) and Orlando (+6 percent). Orlando had the strongest year-over-year employment growth among the 20 metros in September, with job gains of 5.9 percent. This is compared with national employment growth of 1.7 percent. Honolulu had the lowest year-over-year rent growth, increasing by just 0.3 percent. None of the 20 metro areas had annual rent declines in September 2018. While the growth rate in the national index accelerated by only 0.5 percentage points, some metro areas are showing significant acceleration or deceleration compared with a year ago. Houston had the greatest acceleration in rent growth, increasing 3.4 percentage points faster than in September 2017. Seattle’s rent growth decelerated the most, easing by 2.6 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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