A home in a built-for-rent single-family community by American Homes 4 Rent
While the rental apartment market is currently seeing downward pressure on rents, the single-family rental market is back to a solid pace of rent increases. Market analyses by Hunter Housing Economics show that there is an increasing level of pent-up demand for built-for-rent single-family housing.
New data just released show that single-family rent growth regained strength in February, posting the highest annual appreciation since April, 2023 (per Molly Boesel, principal economist of CoreLogic®. That firm, one of my favorite data providers, has just released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas. CoreLogic provided the data to us in advance of the release for us to analyze it.
On a regional level, February’s annual rental cost increases could again signal that Americans are slowly migrating back to larger, more expensive coastal metros. New York saw the nation’s highest year-over-year rental price gain, followed by Seattle and Boston. Those metros had January median rent prices of more than $3,200 for a three-bedroom property, compared with the U.S. median of about $2,100. By contrast, in February 2023, less expensive metros led the country for rent growth, including St. Louis; Charlotte, North Carolina and Orlando, Florida.
Boesel notes that monthly rent growth also picked up in February and was higher than what is typically recorded in winter months. Lower-priced properties had the smallest annual rent growth in February. Properties in this price range saw gains of more than 30% over the past four years, a slightly larger increase than those in the higher-priced range.
To gain a detailed view of single-family rental prices across different market segments, CoreLogic examines four tiers of rental prices and two property-type tiers. National single-family rent growth across those tiers, and the year-over-year changes, were as follows:
· Lower-priced (75% or less than the regional median): up 2.5%, down from 7.3% in February 2023
· Lower-middle priced (75% to 100% of the regional median): up 3.1%, down from 5.7% in February 2023
· Higher-middle priced (100% to 125% of the regional median): up 3.1%, down from 4.4% in February 2023
· Higher-priced (125% or more than the regional median): up 3.2%, a slight increase from the 3.1% recorded in February 2023
· Attached versus detached: Attached single-family rental prices grew by 2.9% year over year in February, compared with the 3.7% increase for detached rentals.
Of the 20 metros analyzed, New York posted the highest year-over-year increase in single-family rents in February 2024, at 6.9%. Seattle registered the second-highest annual gain at 6.8%, followed by Boston at 6.4%.
Research by Hunter Housing Economics shows that the demographic groups that are the primary drivers of single-family rental demand are forming a large number of new households, and their incomes are growing at a much faster rate than that of the general population, allowing these rent increases to continue. Now that the pace of single-family rental construction is about to take a nosedive, there will be pent-up demand, which is expected to further support rents in 2024-2027.
