Low Inventory Driving Rent Increases in Some Metros
May 1, 2019 6:42:34 PM
US SINGLE-FAMILY RENTS UP 2.9 PERCENT YEAR OVER YEAR IN FEBRUARY
Rents for lower-priced homes increased faster than those of higher-price homes.
Phoenix had the largest annual rent increase of the 20 analyzed areas in February.
U.S. single-family rents increased 2.9 percent year over year in February 2019, up from a 2.7 percent increase in February 2018, according to the CoreLogic Single-Family Rental Index (SFRI). The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. Single-family rents climbed steadily starting in 2010, and annual rent increases have stabilized, fluctuating between 2.7 and 3.1 percent for the past 12 months.
Using the rental index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in February 2019 was propped up by low-end rentals, defined as properties with rents 75 percent or less of a region’s median rent. Rents on lower-priced rental homes increased 3.7 percent year over year and rents for higher-priced homes, defined as properties with rents more than 125 percent of the regional median rent, increased 2.4 percent year over year. Both of these segments showed increased rent growth of 0.1 percentage points higher than in February 2018.
Rent growth varies significantly across metro areas. Figure 2 shows the year-over-year change in the rental index for 20 large metro areas in February 2019. Phoenix had the highest year-over-year rent growth this February with an increase of 8 percent, followed by Las Vegas (7.1 percent) and Tucson (6.5 percent). Orlando had the strongest year-over-year employment growth among the 20 metros in February, with job gains of 3.9 percent, and Phoenix had employment growth of 3.1 percent. This is compared with national employment growth of 1.7 percent. Miami had the lowest rent growth in February, increasing by just 1.2 percent from the prior year. In addition to high employment growth, Phoenix also had low rental supply, with only 1.9 months of single-family rentals available at the current rental rate. In contrast, Miami had 7.6 months of single-family rentals available in February.
 Metro areas used in this report are Core Based Statistical Areas. The SFRI is computed for 75 CBSAs.