Despite Cooling Home Price Appreciation Gains in 2019
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 April 2019, as compared to 2.8% in April 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 4.1%, and have stabilized over the last year with a monthly average of 3%.
National rent growth continued to be propped up by low-end rentals in April. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.6% year over year in April 2019, down from the 3.8% increase experienced in April 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region's median rent, increased 2.5% in April 2019, up from 2.4% in April 2018.
Among the top 20 US metro areas, Phoenix had the highest year-over-year increase in single-family rents in April 2019 at 6.9% (compared to April 2018), followed by Las Vegas and Tucson, Arizona. Both metros experienced a 6.5% increase in year-over-year rent growth. For the third consecutive month, Miami experienced the lowest rent increases of all analyzed metros at 0.9%.
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 April, driven by the annual employment growth of 3.2%. This is compared with the national employment growth average of 1.8%, according to data from the United States Bureau of Labor Statistics.
"Slowing price appreciation started to take hold of the home sales market a year ago - according to the CoreLogic Home Price Index (HPI). But, that's not the case for the single-family rental market, which has seen steady rent increases," said Molly Boesel, principal economist at CoreLogic. "While the housing market is cooling, home prices remain high in some of the nation's top metros. This may be contributing to the growing rental demand, as many potential buyers are being priced out of the market."