The shift in consumer preferences toward lower-density communities and single-family shelter continues to cause a ripple effect in the rental market, with single-family rent growth reaching the highest level since at least January 2005 in May. Due to high purchase prices and ongoing limited availability of for-sale homes, would-be first-time buyers are opting to remain renters instead of entering the housing market. However, similar inventory and affordability challenges are also emerging in the rental space. For the first quarter of 2021 the U.S Census Bureau reported that single-family rentals averaged 94.5% occupancy, up from 93.7% one year earlier, which has continued to drive up rent prices.
“Single-family rents rose by nearly four times the rate from a year earlier in May 2021,” said Molly Boesel, principal economist at CoreLogic. “Strong job and income growth, as well as fierce competition for for-sale housing, is fueling demand for single-family rentals. Looking ahead, these market forces are expected to remain for much of the year and keep rent increases high, particularly in urban areas and tech hubs as more people return to working in person.”
To gain a detailed view of single-family rental prices, CoreLogic examines four tiers of rental prices. National single-family rent growth across the four tiers, and the year-over-year changes, were as follows:
- Lower-priced (75% or less than the regional median): 4.6%, up from 2.7% in May 2020
- Lower-middle priced (75% to 100% of the regional median): 5.8%, up from 2.0% in May 2020
- Higher-middle priced (100% to 125% of the regional median): 6.2%, up from 1.7% in May 2020
- Higher-priced (125% or more than the regional median): 7.9%, up from 1.3% in May 2020
Among the 20 metro areas shown in Table 1, Phoenix had the highest year-over-year increase in single-family rents in May 2021 at 14%. Tucson, Arizona, had the second-highest rent price growth with a gain of 11.1%. Some tourist destinations that were hard-hit by the pandemic are also showing strong signs of recovery, with Las Vegas logging the third-highest year-over-year rent growth of 10.7%. And while Boston has experienced the largest decrease in 20 metros’ rent prices for 11 consecutive months now (with an annual decline of 4.5% in May) the area’s rate of decline is slowing compared to previous months.
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.
The CoreLogic Single-Family Rent Index analyzes data across four price tiers: Lower-priced, which represent rentals with prices 75% or below the regional median; lower-middle, 75% to 100% of the regional median; higher-middle, 100%-125% of the regional median; and higher-priced, 125% or more above the regional median.
Median rent price data is produced monthly by CoreLogic RentalTrends. RentalTrends is built on a database of more than 11 million rental properties (over 75% of all U.S. individual owned rental properties) and covers all 50 states and 17,500 ZIP codes.
The data provided is for use only by the primary recipient or the primary recipient’s publication or broadcast. This data may not be re-sold, republished or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without prior written permission from CoreLogic. Any CoreLogic data used for publication or broadcast, in whole or in part, must be sourced as coming from CoreLogic, a data and analytics company. For use with broadcast or web content, the citation must directly accompany first reference of the data. If the data is illustrated with maps, charts, graphs or other visual elements, the CoreLogic logo must be included on screen or website.
CoreLogic, the leading provider of property insights and solutions, promotes a healthy housing market and thriving communities. Through its enhanced property data solutions, services and technologies, CoreLogic enables real estate professionals, financial institutions, insurance carriers, government agencies and other housing market participants to help millions of people find, buy and protect their homes.
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