Unlike Home Prices, Single-Family Rent Growth Not Slowing Down
Jan 29, 2019 9:59:40 AM
US SINGLE-FAMILY RENTS UP 2.9 PERCENT YEAR OVER YEAR IN NOVEMBER
High-end segment rent growth accelerated and low-end segment decelerated in November 2018 compared with November 2017.
Seattle rents decreased in November.
Single-family rents increased 2.9 percent year over year in November 2018, up from a 2.8 percent increase in November 2017, 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 between 2010 and 2018. Rent increases have stabilized, fluctuating between 2.7 and 3.2 percent for the past 12 months. This is a departure from the CoreLogic Home Price Index (HPI), which lost momentum over the past 12 months. The HPI increased 5.1 percent in November 2018 a slow-down from the November 2017 gain of 6.2 percent.
Using the rental index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in November 2018 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 3.8 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 2.6 percent year over year. However, rent growth is accelerating for the high end and decelerating for the low end. High-end rent growth was 0.3 percentage points higher and low-end rent growth was 0.2 percentage points lower than in November 2017.
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 November 2018. Las Vegas had the highest year-over-year rent growth this November with an increase of 6.7 percent, followed by Phoenix (6.1 percent) and Orlando (5.3 percent). Orlando had the strongest year-over-year employment growth among the 20 metros in November, with job gains of 4.8 percent. This is compared with national employment growth of 1.6 percent. Seattle was the only one of the 20 metro areas to show a decrease in rents, falling 0.7 percent in November 2018 compared with November 2017. While the growth rate in the national index was stable, accelerating by only 0.1 percentage points, some metro areas are showing significant acceleration or deceleration compared with a year ago. Miami had the greatest acceleration in rent growth, increasing 3.3 percentage points faster than in November 2017. Seattle’s rent growth decelerated the most, easing by 5.1 percentage points.
 Metro areas used in this report are Core Based Statistical Areas. The SFRI is computed for 75 CBSAs.