Single-Family Rents Increasing Twice as Fast as Inflation

US Single-Family Rents Up 2.9% Year Over Year in January

By Molly Boesel Housing Affordability

  • Rents for lower-priced homes increased faster than those of higher-priced homes in January compared with a year earlier.
  • Phoenix and Tucson were on top for rent growth.

U.S. single-family rents increased 2.9% year over year in January 2020, down a bit from the gain of 3.2% in January 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. Increases in rents averaged 3% over the past year, which is more than double the rate of inflation over that same time period[1].

Figure 2: Single Family Rent Index Year Over Year Percent Change In 20 Markets

Using the rent index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in January 2020 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 3.5% year over year and rents for higher-priced homes, defined as properties with rents more than 125% of the regional median rent, increased 2.6% year over year. Rents for lower-priced homes have been growing faster than for higher-priced homes since May 2014, though the difference in these two growth rates has narrowed over time.

Figure 2: Single Family Rent Index Year Over Year Percent Change In 20 Markets

Rent growth varies significantly across metro areas[2]. Figure 2 shows the year-over-year change in the rental index for 20 large metropolitan areas in January 2020. Phoenix had the highest year-over-year rent growth this January as it has since late 2018, with an increase of 6.4%, followed by Tucson (+5.2%) and Las Vegas (+4.9%). Honolulu had the lowest rent growth in January, increasing by 0.6% from the prior year. Orlando had the largest deceleration in rent growth in January, showing annual rent growth of 2.4 percentage points lower than in January 2019. Boston had the largest acceleration in rent growth in January, with rents increasing 2.2 percentage points faster than in January 2019.

[1] As measured by the Consumer Price Index (CPI) Less Shelter.

[2] 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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