Lower-Priced Homes Appreciating Faster Than Higher-Priced Homes, But the Gap Narrowed

US Single-Family Rents Up 3.1% Year Over Year in October

By Molly Boesel Housing Affordability, Property Rental

  • Rents for lower-priced homes increased faster than those of higher-priced homes in October compared with a year earlier.
  • Rent increases were highest in the Phoenix and Seattle.

U.S. single-family rents increased 3.1% year over year in October 2019, up from a 2.9% increase in October 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.  

Figure 1: National Single-Family Rent Index Year-Over-Year Percent Change By Price Tier

Using the rent index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in October 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 3.6% 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. Rent growth for higher-priced homes gained momentum in October 2019, increasing by 0.4 percentage points faster than in October 2018, while the pace of annual rent growth for lower-priced rental homes slowed by 0.2 percentage points resulting in the narrowest gap in rent growth for these price segments since 2014.

Figure 2: single-family-rent-index-year-over-year-percent-change-in-20-markets

 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 October 2019. For the eleventh consecutive month, Phoenix had the highest year-over-year rent growth this October with an increase of 6.8%, followed by Seattle (+5.8%) and Las Vegas (+5.4%). Miami had the lowest rent growth in October, as it has for nine straight months, increasing by 1% from the prior year. Orlando had the largest deceleration in rent growth in October, showing annual rent growth of 2.4 percentage points lower than in October 2018. Seattle had the largest acceleration in rent growth in October, with rents increasing 5.2 percentage points faster than in October 2018. This resurgence in rent increases lifted Seattle from one of the areas with lowest rent increases to the number two spot.

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

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