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 2018 shows a national rent increase of 3.1 percent, compared to 2.9 percent in December 2017.
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 2018. However, year-over-year rent price increases overall have slowed since February 2016, when they peaked at 4.2 percent, and have stabilized over the last year with a monthly average of 3 percent.
National rent growth was continuously propped up by low-end rentals throughout 2018, and this trend continued into December. Rent prices among this tier, defined as properties with rent prices less than 75 percent of the regional median, increased 3.7 percent year over year in December 2018, down slightly from the 3.9 percent increase experienced in December 2017. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125 percent of a region’s median rent, increased 2.9 percent in December 2018, up from 2.5 percent in December 2017.
Among the 20 metro areas, Phoenix had the highest year-over-year increase in single-family rents in December 2018 at 6.9 percent (compared to December 2017), followed closely by Las Vegas at 6.8 percent. Orlando experienced the third highest year-over-year rent increase at 5.1 percent. Rent prices in disaster-affected areas like Houston saw steady growth throughout 2018. However, in December, Houston experienced the lowest rent increases of all analyzed metros at 1 percent, down from 2.7 percent in 2017. This is the lowest rent growth for the Houston metro area since September 2017, in the immediate aftermath of Hurricane Harvey.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Both Orlando and Phoenix experienced high year-over-year rent growth in December 2018, driven by employment growth of 4.8 percent and 4 percent year over year, respectively. This is compared with the national employment growth average of 1.7 percent, according to data from the United States Bureau of Labor Statistics.
“Single-family rents increased an average of 3 percent in 2018, exceeding the 2.7 percent average pace experienced in 2017,” said Molly Boesel, principal economist at CoreLogic. “The strengthening in rent prices reflects strong economic and labor markets. However, low-end rental increases outpaced high- end increases for the fifth consecutive year, suggesting continued supply constraints on the lower end.”
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 70 Core Based Statistical Areas (CBSAs)—including 40 CBSAs with four value tiers—and a national composite index.
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