CoreLogic’s newly released Single-Family Rent Index (SFRI) — which analyzes single-family rent price changes nationally and among 20 U.S. metropolitan areas — shows a national rent increase of 3 percent in September 2019, which remained flat in comparison to September 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 percent, and have stabilized around 3 percent since early 2019.
September marked the 65th consecutive month in which low-end rentals propped up national rent growth. Rent prices among this tier, defined as properties with rent prices less than 75 percent of the regional median, increased 3.8 percent year over year in September 2019, the same as in September 2018. 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 September 2019, up from a gain of 2.5 percent in September 2018.
Among the 20 metro areas shown in Table 1 below, and for the tenth consecutive month, Phoenix had the highest year-over-year increase in single-family rents in September 2019 at 6.7 percent (compared to September 2018), followed by Las Vegas at 5.8 percent. Seattle outpaced Tucson, Arizona, as the third-highest metro for rent growth in September with gains of 5.5 percent, while Miami experienced the lowest rent increases of all analyzed metros at 1 percent.
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 September, driven by the annual employment growth of 2.4 percent. This is compared with the national employment growth average of 1.4 percent, according to data from the United States Bureau of Labor Statistics. Seattle also experienced an elevated annual employment growth of 3.3 percent, which played a role in its above-average, year-over-year rent increase in September.
“Low rental supply coupled with ongoing demand pushed up rents in September,” said Molly Boesel, principal economist at CoreLogic. “Vacancy rates have fallen moderately on the national level over the last quarter – with a 0.3 percent decrease in the third quarter of 2019 compared to a year earlier – and more significantly in select metro areas. Of the metros analyzed in the CoreLogic Single-Family Rent Index, Phoenix experienced the largest decrease in vacancy rates at 2.6 percent, which helped drive its rent growth to the top of the nation in September.”