—U.S. single-family rent prices increased 2.9% year over year in December 2019—
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas. Data collected for December 2019 shows a national rent increase of 2.9% year over year, down from 3% in December 2018.
Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The SFRI shows single-family rent prices have climbed between 2010 and 2019. However, overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%, and have stabilized at around 3% since early 2019.
Low-end rentals propped up national rent growth in December, which has been an ongoing trend since April 2014. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.4% year over year in December 2019, down from a gain of 3.9% in December 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.5% in December 2019, down from a gain of 2.7% in December 2018.
Among the 20 metro areas shown in Table 1, and for the 13th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in December 2019 at 6.7% (compared to December 2018). Tucson, Arizona experienced the second-highest rent price growth in December 2019 with gains of 5.7%, followed closely by Las Vegas at 5.1%. Honolulu experienced the lowest rent increases out of all analyzed metros at 0.5%.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix experienced the highest year-over-year rent growth in December 2019, driven by annual employment growth of 3.2%. Austin, Texas experienced a 3.5% employment growth, which played a role in its above-average rent growth of 3.8% last December. This is compared with the national employment growth average of 1.4%, according to data from the United States Bureau of Labor Statistics.
“Strong economic growth, including the lowest unemployment rate in over 50 years, helped push up rents by an average of 3% in 2019, which was the fastest annual rent appreciation since 2016,” said Molly Boesel, principal economist at CoreLogic. “Employment growth is expected to remain strong in 2020. This, coupled with rental vacancies reaching a 34-year low in the last quarter of 2019, could lead to continued rent increases in the near term.”
The single-family rental market accounts for half of the rental housing stock, yet unlike the multifamily market, which has many different sources of rent data, there are minimal quality adjusted single-family rent transaction data. The CoreLogic Single-Family Rent Index (SFRI) serves to fill that void by applying a repeat pairing methodology to single-family rental listing data in the Multiple Listing Service. CoreLogic constructed the SFRI for over 80 metropolitan areas —including 45 metros with four value tiers—and a national composite index.
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