Single-Family Rents Were on the Rise in Early 2020

US Single-Family Rents Up 3.3% Year Over Year in February

By Molly Boesel Housing Affordability, Real Estate

  • Rents for lower-priced homes increased faster than those of higher-priced homes in February compared with a year earlier.
  • Phoenix had the highest increase in rent in February from a year earlier.
  • Rents in Detroit fell in February from a year ago.

U.S. single-family rents increased 3.3% year over year in February 2020, up from the gain of 3.0% in February 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. Single-family rents were on the rise in early 2020 prior to the COVID-19 outbreak, having increased by an average of 3.1% year over year for the first two months of the year. Impacts from state and local shutdowns on the rental market will be apparent in the coming months.

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 in rent growth. Figure 1 shows that the index’s overall growth in February 2020 was propped up by low-end rentals, defined as properties with rents 75% or less of the median rent of the metro area[1]. Rents on low-tier rental homes increased 3.6% year over year and rents for high-tier homes, defined as properties with rents more than 125% of the metro-area median rent, increased 3.0% year over year. Rents for low-tier homes have been outpacing than those of high-tier homes since April 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. Figure 2 shows the year-over-year change in the rental index for 20 large metropolitan areas in February 2020. Phoenix had the highest year-over-year rent growth this February as it has since late 2018, with an increase of 6.2%, followed by Seattle (+6.1%) and St. Louis (+5.4%). Detroit had a decrease in rents in February, falling by 2.2% from the prior year. Detroit also had the largest deceleration in rent growth in February, showing annual rent growth of 5.4 percentage points lower than in February 2019. Seattle had the largest acceleration in rent growth in February, with rents increasing 4.1 percentage points faster than in February 2019.

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