- National rent price growth eased in March after three consecutive months of acceleration
- Rental application volumes rapidly decreased in the second half of March as widespread unemployment and shelter-in-place directives impeded demand
- Rent prices are expected to continue cooling as unemployment reached an 80-year high in April
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 March 2020 shows a national rent increase of 3% year over year, unchanged from March 2019.
After three consecutive months of acceleration, March marked the first downshift in annual rent price growth. Rising unemployment and shelter-in-place directives left fewer people pursuing new residences. Rental applications fell by 44% in the second half of March as the economy entered a recession and effects of the coronavirus (COVID-19) took hold. The impact of the pandemic, and the resulting economic crisis, are still unfolding each day and will continue to ripple through the rental market in the coming months.
“Single-family rent increases eased in March, dipping to a 3% annual gain. However, COVID-19 has had varied effects across price tiers,” said Molly Boesel, principal economist at CoreLogic. “Lower-priced rentals experienced a slight uptick in March as renters pursued more affordable rental options. Employment gains turned negative in four of the 20 metropolitan areas analyzed in the CoreLogic SFRI, a trend we can soon expect to see across the nation, which should have an impact on single-family rent prices.”
Despite the slowdown in demand, lower-priced rentals propped up national rent price growth in March 2020. Rent prices among the low-end tier, defined as properties with rent prices less than 75% of the regional median, increased 3.9% year over year in March 2020, up from a gain of 3.7% in March 2019. Meanwhile, higher-priced rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.7% in March 2020, unchanged from March 2019.
Among the 20 metro areas shown in Table 1, and for the 16th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in March 2020 at 6.8% (compared to March 2019). Seattle experienced the second-highest rent price growth in March 2020 with gains of 6.2%, followed by Tucson, Arizona at 5.3%. Honolulu experienced the smallest increase of any of the analyzed metros at 0.7%.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. The Phoenix job market has remained strong throughout the early weeks of the pandemic, experiencing an annual employment growth of 2.7%, compared with the national employment growth average of 0.8%, which allowed rent price growth to remain at the top of the nation in March 2020. Conversely, Honolulu saw a 0.5% decrease in employment year over year in March, contributing to its low rent growth.
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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