Low Rental Supply is Pushing Up Rents

US Single-Family Rents Up 3% Year Over Year in September

By Molly Boesel Housing Affordability, Property Rental

  • Rents for lower-priced homes increased faster than those of higher-priced homes in September compared with a year earlier.
  • Rent increases were highest in the Southwest, with Phoenix and Las Vegas coming out on top.
  • Rent increases accelerated in Seattle.

U.S. single-family rents increased 3% year over year in September 2019, the same rate of increase seen in September 2018, according to the CoreLogic Single-Family Rent 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 started climbing steadily in 2010, and have stabilized at around 3% since early 2019.  

Using the rent index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in September 2019 was propped up by low-end rentals, defined as properties with rents 75% or less of a region’s median rent. Rents on lower-priced rental homes increased 3.8% year over year and rents for higher-priced homes, defined as properties with rents more than 125% of the regional median rent, increased 2.9% year over year. Comparing this September with September 2018, the pace of annual rent growth for lower-priced rental homes remained steady and the pace of rent growth for higher-priced homes increased by 0.4 percentage points.

National 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 metropolitan areas in September 2019. For the tenth consecutive month, Phoenix had the highest year-over-year rent growth this September with an increase of 6.7%, followed by Las Vegas (+5.8%) and Seattle (+5.5%). Miami had the lowest rent growth in September, increasing by 1% from the prior year. Tight rental supply is pushing up rents in Phoenix. According to the U.S. Census Bureau Housing Vacancy Survey[2], Phoenix had the largest decrease in rental vacancy rates among large metros in the third quarter of 2019. Orlando had the largest deceleration in rent growth in September, showing annual rent growth of 2.2 percentage points lower than in September 2018. Seattle had the largest acceleration in rent growth in September, with rents increasing 4.7 percentage points faster than in September 2018. This resurgence in rent increases lifted Seattle from one of the areas with lowest rent increases to the number three spot.

Figure 2

 [1] Metro areas used in this report are Metropolitan Statistical Areas and Metropolitan Divisions where available. The SFRI is computed for 75 metros.

[2] Survey results can be found at https://www.census.gov/housing/hvs/data/rates.html

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