According to CoreLogic's latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas, shows a national rent increase of 3% in August 2019.
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%, and have stabilized over the last year with a monthly average of 3%.
August marked the 64th 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% of the regional median, increased 3.7% year over year in August 2019, down from a gain of 4.1% in August 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region's median rent, increased 2.7% in August 2019, up from a gain of 2.6% in August 2018.
Among the 20 metro areas shown in Table 1, and for the ninth consecutive month, Phoenix had the highest year-over-year increase in single-family rents in August 2019 at 6.6% (compared to August 2018). Las Vegas and Tucson, Arizona experienced the second- and third-highest rent gains in August at 5.8% and 5.3% respectively, while Miami saw the lowest rent increases of all analyzed metros at 1.5%.
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 August, driven by the annual employment growth of 2.7%. This is compared with the national employment growth average of 1.4%, according to data from the United States Bureau of Labor Statistics. Orlando, Florida also experienced an elevated annual employment growth of 4%, which played a role in its above-average, year-over-year rent increase of 3.7% in August.
"National rent increases have settled in around 3% over the past year, and the rate of increase for entry-level rentals has eased over the past six months," said Molly Boesel, principal economist at CoreLogic. "However, home-buying affordability remains a top concern across generations and is keeping many consumers in the rental market. If this trend continues, we may see another uptick in rent price growth in the coming year, particularly in urban areas where we're seeing increasing demand from millennials."