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 May 2019 shows a national rent increase of 3%, compared to 2.8% in May 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 4.1%, and have stabilized over the last year with a monthly average of 3%.
National rent growth continued to be propped up by low-end rentals in May. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.5% year over year in May 2019, down from a gain of 3.9% in May 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.5% in May 2019, up slightly from 2.4% in May 2018.
Among the 20 metro areas shown in Table 1, Phoenix had the highest year-over-year increase in single-family rents in May 2019 at 7.4% (compared to May 2018), followed by Tucson, Arizona at 6.3% and Las Vegas at 6.1%. Miami and Houston tied for the lowest rent increases of all analyzed metros at 1%. This marks the lowest year-over-year rent increase in Houston since October 2017 (when the annual gain was 0.8%), and can likely be attributed to the waning effects of the 2017 hurricane season.
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 high year-over-year rent growth in May, driven by the annual employment growth of 3.2%. This is compared with the national employment growth average of 1.5%, according to data from the United States Bureau of Labor Statistics. Orlando, Florida also experienced an elevated annual employment growth of 3.1%, which played a role in the year-over-year rent increase of 4.1% in May.
“Single-family rents increased the most in metros with high employment growth in May 2019,” said Molly Boesel, principal economist at CoreLogic. “Job growth in Phoenix, Orlando, and Las Vegas doubled the national average during May – stimulating increased rental demand in these markets and therefore driving rent prices upward.”
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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