According to CoreLogic's latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas, data collected for October 2019 shows a national rent increase of 3.1% year over year, compared to 2.9% in October 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%, and have stabilized around 3% since early 2019.
October marked the 66th 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 3.6% year over year in October 2019, down from a gain of 3.8% in October 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region's median rent, increased 2.9% in October 2019, up from a gain of 2.5% in October 2018.
Among the 20 metro areas shown in Table 1, and for the 11th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in October 2019 at 6.8% (compared to October 2018). Seattle outpaced Las Vegas for the second-highest rent price growth in October 2019 with gains of 5.8% and 5.4%, respectively, while Miami experienced the lowest rent increases of all analyzed metros at 1%.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix and Seattle experienced high year-over-year rent growth in October, driven by the annual employment growth of 2.6% and 2.9%, respectively. This is compared with the national employment growth average of 1.4%, according to data from the United States Bureau of Labor Statistics.
"Increases in low-end rent prices have outpaced those on the high end for more than five years as newly-formed households push up demand for entry-level rentals," said Molly Boesel, principal economist at CoreLogic. "However, high-end rents gained momentum for the sixth consecutive month in October 2019, while low-end rates slowed for the first time in roughly five months - resulting in the narrowest gap in rent growth for these price tiers since 2014."