U.S. single-family rent growth strengthened in August, increasing 2.1% year over year, a bit higher than the 1.7% rate reported for July 2020, but a slowdown from the 2.9% rate recorded for August 2019, 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.
Lower-priced rentals continued to prop up national rent price growth, which has been an ongoing trend since April 2014 (Figure 1). However, year-over-year growth among both tiers slowed in August 2020 from a year earlier. Rent prices for the low-end tier, defined as properties with rent prices less than 75% of the regional median, increased 2.5% year over year in August 2020, down from 3.7% in August 2019. Meanwhile, higher-priced rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2% in August 2020, down from a gain of 2.6% in August 2019.
Figure 2 shows the year-over-year change in the rental index for 20 large metropolitan areas in August 2020. Among the 20 metro areas shown, Phoenix had the highest year-over-year rent growth this August as it has since late 2018, with an increase of 5.8%, followed by Tucson (+4.8%) and Charlotte (+4%). Three metro areas experienced annual declines in rent prices: Boston (-1.4%), Honolulu (-0.9%) and Miami (-0.3%).
Boston had the largest deceleration in rent growth in August, showing annual rent growth of 4.5 percentage points lower than in August 2019. The weakness might be attributed to a large number of students choosing to not return to Boston — a city that’s home to 35 colleges and universities — but instead opting to continue virtual learning in their hometowns. U.S. unemployment rates remain elevated and the nation had 7% fewer jobs in August 2020 than a year earlier. However, some areas of the country are continuing to experience higher rates of job loss — adversely impacting rental demand and slowing rent price growth. For example, Honolulu posted an employment decrease of 14% year over year in August and ongoing rent declines. Meanwhile, employment declines in Phoenix (-3.5%) and Tucson (-3.4%) were relatively small amongst the 20 metros covered in the report. With the continued resurgence of COVID-19 cases across the country, we may expect to see further disruption of local rental markets.
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